Nearshoring creates booming demand for border logistics facilities

February 26, 2023 |
Source: Freight Waves,
Noi Mahoney

Business is good at the Otay Mesa port of entry, California’s largest commercial land border crossing, which tallied $62.4 billion in trade in 2022, a 12.7% year-over-year (y/y) increase compared to 2021.

The Otay Mesa port of entry is just south of San Diego along the border across from Tijuana, Mexico.

The growth of trade at Otay Mesa has been spurred by the nearshoring of manufacturing and supply chains from Asia into Mexico, which is creating a surge in demand for industrial space in cities and communities along the border, according to trade operators.

“The cross-border market is growing mostly due to the effects of nearshoring and e-commerce fulfillment centers coming to Mexico to take advantage of the 321 program, which allows duty-free entry of goods,” Eduardo Acosta, vice president of R.L. Jones Customhouse Brokers, told FreightWaves.

San Diego-based R.L. Jones is a freight brokerage that specializes in imports from Mexico. The company recently signed a full-building, prelease agreement with Majestic Realty Co. for a 240,975-square-foot building at the Landmark at Otay industrial complex. The building, scheduled for completion in May, will serve as R.L. Jones’ corporate headquarters.

R.L. Jones is already operating in a 150,000-square-foot building at the Landmark at Otay.

Acosta said growing trade between Mexico and the U.S. necessitated getting more industrial space near the border.

“The main reason we moved to the Landmark at Otay business park was to prepare our business for expansion due to the growth of business at the border related to the growth of existing clients and a boom in e-commerce fulfillment in Mexico,” Acosta said.

R.L. Jones serves clients in industries such as aerospace, fresh produce, medical devices, automotive, textile and apparel, electronics, and furniture manufacturing.

“Basically, for these industries, it’s raw materials going south and finished goods coming north, and most of these goods are staged at our warehouses in Otay Mesa,” Acosta said.

According to FreightWaves’ SONAR platform, freight volumes in San Diego (OTVI.SAN), which includes the Otay Mesa port of entry, are up about 3% week over week and 12% since Jan. 3.

Officials for Majestic Realty said the deal with R.L. Jones is one of the largest industrial non-Amazon related lease agreements in the past decade in Otay Mesa and San Diego County.  

“It speaks to the demand for industrial space in the area,” Majestic Realty Co. Vice President Tom Simmons said. “R.L. Jones is a customs broker, so obviously they need a larger footprint right now because they’re handling more freight across the border.”

The Landmark at Otay, a partnership between Majestic Realty and Sunroad Enterprises, began in 2021. The industrial park was initially four buildings on a 50-acre site but has recently added 17 acres of adjoining property. The Landmark at Otay will have more than 1.1 million square feet of industrial space upon build-out in early 2024.

Simmons said industrial space is in high demand all along the U.S.-Mexico border. In 2021, Majestic Realty began the development of Port Grande in Laredo, Texas. The 2,000-acre master planned logistics hub aims to accommodate growing trade flows between Mexico and Texas.

“We’re seeing demand in all sorts of cross-border markets, whether it be Laredo or El Paso, Texas, or Otay Mesa here in California; there’s just more and more velocity at these cross-border towns, because there’s just more and more manufacturing that is going to Mexico,” Simmons said.


Marty Schechter

Schechter Public Relations