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Stalled Commercial Expansion of City-Owned Airport in San Diego May Be Revived

Industrial Realty Group of Los Angeles Acquires Stake in Metropolitan Airpark Project

Plans call for adding industrial and commercial components at Brown Field, a municipal airport in San Diego's Otay Mesa neighborhood near the U.S.-Mexico border. (Metropolitan Airpark)

By Lou Hirsh CoStar News September 5, 2022 | 7:42 P.M. Developer Industrial Realty Group of Los Angeles has acquired a nearly 50% stake in a San Diego project called Metropolitan Airpark, potentially reviving long-stalled plans to redevelop portions of a municipal airport with $1 billion in new elements including industrial, retail and hotel facilities.

San Diego City Council approved in August the partial interest transfer of a leasehold agreement involving the city and San Diego Airpark LLC, led by Carlsbad, California, developer Richard Sax. Plans call for redeveloping a large portion of the city-owned Brown Field airport in Otay Mesa, near the U.S.-Mexico border.

Filings with the city show Industrial Realty Group will now have a 42.8% interest in the airpark development entity. Dollar figures for the transaction were not available, and Industrial Realty Group did not return requests from CoStar News to comment.

The 330-acre Brown Field project is planned to include new hangars and aircraft support services, a heliport and more than 1.3 million square feet of industrial and other commercial space, with retail and a hotel possible in later phases. It would take up nearly half of the total airport acreage of approximately 880 acres.

It also includes more than $50 million in upgrades expected to streamline traffic in the area. City planners and developers project the redevelopment will generate $500 million in new annual revenue for the region at full build-out.

“The development of Brown Field municipal airport — which has been historically underutilized — will be a catalyst project for the growth of Otay Mesa, which is a key area of the Cali Baja mega-region and the economic engine of the South Bay,”

Councilmember Vivian Moreno, who represents the district housing the airport project, said in a statement after the City Council vote on the development interest transfer. Environmental Challenges The city in 2013 approved developers’ plans for a multiphase project expected to entail more than $1 billion in new development at the small-craft municipal airport, located about 3 miles from the U.S.-Mexico border. It has since been approved by the Federal Aviation Administration.

However, the project was held up by environmental challenges from nearby residents that have been resolved, and most recently by a pandemic climate that has slowed some large commercial developments. The investment by Industrial Realty Group is seen by some as a sign that the project may soon proceed at a quicker pace.

According to its website, Industrial Realty Group operates a commercial portfolio of more than 150 properties in 28 states, with more than 100 million rentable square feet. Its past projects include the redevelopment of a dilapidated steel mill in Baltimore that now houses tenants including wood product firms Boise Cascade and Weyerhaeuser. It also redeveloped the former McClellan Air Force Base in Sacramento into an industrial park.

Otay Mesa during the past two years has been among San Diego’s most active neighborhoods for industrial leasing and development, as logistics, e-commerce and other firms look to build up their presence near the border and also improve supply chains that have been disrupted by the pandemic.

Regional officials said more business is expected after construction began in late August on a new commercial border crossing to the east of the existing crossing in the busy Otay Mesa enclave. The new crossing is expected to link with state Route 11, a new toll road being built by California and federal officials to ease chronic traffic congestion at the border and connect drivers with existing freeways to the north.

The city of San Diego has sought for several years to make more effective commercial use of land at its two municipal airports. Last year, officials approved developers’ plans to add 60,000 square feet of new hangars and attached service and commercial space at Montgomery Field, spanning more than 450 acres in the city’s Kearny Mesa neighborhood.

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