Santee, San Diego Emerges as Industrial Hub Thanks to Unique Land Profile

Santee, California, has become an increasingly important industrial development node in San Diego County. And by 2026, the city's position in the regional logistics network will have strengthened because of sustained demand, limited supply and improved transportation connectivity.

According to CBRE Research and CoStar market analytics, East County industrial vacancy has remained among the lowest in the region—often between 2% and 3%—a trend that has pushed tenants and developers to look toward Santee for modern space that can accommodate evolving operational needs.

This tight market environment has elevated the value of Santee's industrially zoned pockets, particularly those near State Route 52 and State Route 67, which offer direct access to the broader San Diego region and connections to the Inland Empire and Southern California distribution corridors.

Santee's industrial growth has been shaped by its unique land profile. While central San Diego submarkets face severe land constraints and rising rents, Santee has maintained a balance of developable parcels and infill opportunities that appeal to tenants in construction, building materials, service industries and last-mile delivery.

Reports from the San Diego Regional Economic Development Corp. note that East County's expanding labor pool and relative affordability have further supported industrial migration toward Santee, especially among operators seeking smaller-bay configurations, high-clear heights and flexible yard space.

Developers have responded by delivering projects that blend modern functionality with community compatibility, incorporating improved circulation layouts, upgraded façades and sustainability features that align with regional planning goals.

The rise of industrial outdoor storage has also influenced Santee's trajectory. Research from Marcus & Millichap and JLL shows IOS demand has surged across Southern California because of e-commerce growth, increased fleet requirements and the need for laydown yards that traditional warehouses cannot provide.

Santee's zoning allowances and access to major roadways have made it a practical location for these uses, attracting tenants who require both operational flexibility and proximity to population centers.

Acore Capital Funds Palisade Santee Commerce Center

In the region last week, U.S. commercial real estate investment manager Acore Capital provided a $71.25 million construction loan to North Palisade Partners for the acquisition and development of Palisade Santee Commerce Center.

The financing will support the approximately 291,000-square-foot industrial development in Santee.

"San Diego is a highly supply-constrained industrial market, particularly in infill locations where barriers to new development are high and the entitlement process can take years," Dimitar Goulev, managing director, originations at Acore Capital, told GlobeSt.com.

"The sponsor spent several years entitling this site and creating significant value along the way, and we believe the project is well positioned to meet demand from tenants that continue to face a shortage of available, high-quality options."

The combination of limited new supply, strong tenant demand and the work North Palisade has already put into the site made it an attractive opportunity to finance, Goulev said.

The financing was arranged by Cushman & Wakefield's Rob Rubano, executive vice chairman, Brian Share, vice chair and Joe Lieske, managing director, on behalf of North Palisade Partners.

The asset is at 10990 N. Woodside Ave. on a site of approximately 13.5 acres. It will feature two buildings totaling 290,618 square feet, with spaces ranging from approximately 25,500 square feet to a full-building leasing opportunity.

Construction is expected to commence in Q4 2026, with delivery anticipated in Q4 2027.

Once constructed, the development will feature 36-foot clear heights, 54 dock-high doors, six ground-level doors, a secured 185-foot truck court and approximately 296 parking spaces.

It is located near State Route 67 and Interstate 8, providing connectivity throughout San Diego County and to key regional transportation infrastructure, including the Port of San Diego and San Diego International Airport.

As industrial requirements continue to evolve, Santee is positioned to remain a competitive submarket beyond 2026. Its combination of transportation access, land availability and strong regional demand supports a development environment that is both resilient and increasingly strategic within the broader San Diego industrial landscape.