Lower Rents, Labor Pool Held Draw of South Bay

The word is out in San Diego: If you’re looking for a combination of comparatively affordable commercial space and a large pool of workers, head for this city and other areas south of downtown San Diego.

Developer Bennet Greenwald of Greenwald/McDonald, San Diego, said that the South Bay, as the region is called here, is taking over from Kearny Mesa as a major space provider for smaller businesses.

“The South Bay has space for 50 to 55 cents per square foot per month--substantially below the 70 to 75 cents charged in Kearny Mesa,” he said.

“Land is cheaper in Chula Vista, National City and San Ysidro, government is more cooperative, it has the county’s second largest labor pool next to central San Diego and the rents are cheaper. If I can do business in the South Bay for the rest of my life, I’ll die a happy man!”

Ties With Mexico

He said that his firm’s International Business Park--with 88,000 square feet of industrial incubator space in its first phase--is more than 60% leased, with 95% of the businesses having ties with Mexico. Tenants include Sanyo, San Marcos Blankets, Tijuana Oil Co., Multis Trades Corp., Tacna International and U.S. Trac.

“We plan to start a second phase totaling 73,000 square feet because of the success of this project,” according to his partner, P. Michael McDonald.

“As a strong incubator market, the South Bay has plenty of competitively priced space available for smaller companies likely to grow over the next year or two. Land prices averaging $7 to $8 a square foot, compared to $10, $11 and more up north, help keep costs affordable.”

This view is supported by Mike Smith of Coldwell Banker Commercial Real Estate Services, San Diego, who said that there are 470,000 square feet of industrial incubator space available, under construction or proposed in the South Bay.

Increased Space

Space absorption has increased 30% in each of the last three years and shows no signs of slowing, Smith added.

Gustavo Gonzales, president of San Marcos Blankets, initially leased 1,920 square feet of space in the International Business Park. Because of the success of his business, he soon needed more space. He now occupies almost 6,000 square feet of office, warehouse and distribution space.

McDonald and Greenwald have developed nearly 600,000 square feet of space, valued at nearly $60 million, in the South Bay. In addition to the San Ysidro project, they have developed the Marina Gateway Business Park in Chula Vista and plan to break ground soon on the 177,000-square-foot Otay Valley Industrial Park on Otay Valley Road in Chula Vista.

The Otay Valley project will include--in addition to incubator space--a 70,000-square-foot building suitable for a maquiladora or twin-plant user, Greenwald said.

High-Tech Space

The Marina Gateway Business Park, at the entrance to the new Chula Vista Marina, demonstrates that the South Bay can attract the kind of high-tech space users that normally would never have considered the area, he said.

“Amex Systems and Integrated Systems Analysts in Marina Gateway find the location convenient to the Navy facilities and their employees can find more affordable housing here than they can in North County communities,” Greenwald said.

“Our 102,000-square-foot Amex Systems building and the 27,000-square-foot Integrated Systems Analysts won a beautification award from the Chula Vista Chamber of Commerce and the city. We plan to build a 125-room hotel there, a restaurant and another build-to-suit, possibly for an Amex expansion.”