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Amazon Increasing Its South County Portfolio in San Diego

Amazon Accounted for More Than 20% of Industrial Market's Leasing Volume in the Second Quarter

By Joshua Ohl CoStar Analytics August 16, 2021 | 2:04 P.M.

Amazon is putting the finishing touches on its 3.4 million-square-foot distribution center in San Diego's Otay Mesa neighborhood. Seefried Properties broke ground on the four-story facility more than one year ago, and Amazon is in the process of hiring roughly 1,500 workers to staff the facility. It is located about one mile from the border with Mexico, and wages at the facility start at $15 per hour.

Companies are increasingly pivoting to the border region close to San Diego's port of entry with Mexico, where more than 1.4 million northbound commercial trucks pass annually. Firms are taking advantage of the United States-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement in 2020. It provides American and Canadian businesses tax incentives to outsource to Mexico instead of to Asian countries.

If its 3.4 million-square-foot facility wasn’t enough, Amazon also signed a lease for a 700,000-square-foot, build-to-suit located across the street during the second quarter. The additional facility in Southern California broke ground before summer and will handle bulkier and heavier items that don’t fit into standard 18-inch by 18-inch boxes.

Amazon reported in its 2021 U.S. Economic Impact Report that the company has invested more than $12.3 billion in the San Diego region over the past 10 years while creating more than 4,000 jobs. Investments include not only its logistics footprint but also its portfolio of brick-and-mortar retail locations, including Whole Foods, among other initiatives.

All told, Amazon leased more than 1.1 million square feet during the second quarter in four industrial leases across the county. Those deals combined for 23% of the total new industrial leasing volume in the San Diego industrial market during the second quarter. In Carlsbad and Oceanside, Amazon signed leases for 175,000 square feet and 140,000 square feet, respectively. The Oceanside lease is for a build-to-suit facility by Lincoln Property Group.

In Chula Vista, Amazon leased almost 85,000 square feet for a delivery station, its second deal in the city in 2021. Delivery stations are the final stop before an order heads out for delivery to the customer’s door.

Given Amazon’s preference for speeding up delivery times to within hours of placing an order, it is likely the region will see further expansions from the e-commerce giant.

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