Industrial Development

California Select Industrial Partners, L.P. (CSIP)




Location: San Diego, CA

Property Description:

  • 62.5 gross acres (53.0 net acres) of zoned and entitled industrial land.
  • Sub-divided into parcels as small as 1 acre to provide marketing flexibility.
  • Located on the border with Mexico directly north of the international airport in Tijuana.
  • Site offered potential for a bulk sale of the land, sale of individual parcels, or vertical development for 12 buildings ranging in size from 24,000 square feet to 233,333 square feet.

Rationale for Acquisition:

Developable industrial land in San Diego County particularly in Central County and South County had become scarce, creating a supply-restricted market. Available sites in Central County consisted primarily of smaller second phases of corporate properties. Penwood believed industrial development in Central County was to be limited to redevelopment of functionally obsolete properties.

South County, specifically Otay Mesa, was the only submarket south of Vista and Oceanside in North County with any significant vacant land zoned for industrial development. In addition, the permitting process in San Diego typically takes between 36 and 48 months from planning through final approval, allowing for more clarity on competitive sites.

Investment Strategy:

The permits for the subject property were near final approval at the time of the CSIP acquisition. A new toll road, SR-125, was under construction and was expected to significantly improve access to Otay Mesa from Central County. In addition, SR-905 was in the final phases of planning and funding, and construction was expected to start within a few years of CSIP’s acquisition, thus improving the east-west access to the area. With no available land in Central County and access to Otay Mesa expected to greatly improve, business growth and migration to Otay Mesa was anticipated to increase significantly, with property values rising commensurately.


The investment strategy was executed as the entire site was sold to the owners of the international airport in Tijuana. The group subsequently received approval to develop a cross-border terminal on the Otay Pacific site. While individual lot sale demand was strong, the sale to the airport group offered a shortened marketing period and savings on sale commissions. The development was completed on budget.

*Please note that past performance is not a guarantee of future results.

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