The result: Banks throughout the region have seen an increase in applications for borrowing from both commercial developers and residential contractors, said Bruce Ives, president and CEO for Santee-based Cuyamaca Bank.

There has also been a rise in the number of people applying for money to purchase homes throughout the region, Ives added.

However, many cities in East County are seeing a shortage of land for new development — and like its larger counterpart to the west — cities in East County are turning back to their developed urban core for redevelopment and infill opportunities.

In El Cajon, most of the action now is condominium conversions with about 436 units approved by the planning department and the City Council, said DeWayne Guyer, the city’s assistant community development director.

There is also strong activity in the new attached-home market, with more than 330 condominium units approved for construction in three large projects in the city over the past year.

A trend picking up steam in El Cajon is the construction of a second unit on a plot of land with an existing home, Guyer said.

La Mesa is also looking at infill development and redevelopment opportunities, said Dave Witt, La Mesa’s director of community development.

La Mesa is lacking production of attached units resulting from stringent guidelines for condominium conversions, Witt said.

The city of Lemon Grove has also been built out and is anticipating no major, new residential projects. Rather, infill development will make up the majority of construction, said Graham Mitchell, city manager of Lemon Grove.

"I believe that we will see tenant improvements of older stock and tearing down older stock and rebuilding," Mitchell said. "We have seen the beginning of that and I think we will see a lot more of this in the near future because there is so little land available."

The city has a growing percentage of housing stock that is really getting worn down, and it’s cheaper to buy that and improve it rather than building from the ground up, Mitchell added.

Also seeing strong growth in attached projects is Santee. Projects under way include 22 new apartments, 133 senior apartments and 114 condominiums, said Pam White, the city of Santee’s director of economic development and housing.

Santee may be one of the closest regions left in the heart of San Diego with a big chunk of developable land.

A major question mark in Santee has been the Fanita Ranch properties, a 2,600-acre parcel of land zoned mostly for single-family residences. Development has been stalled on the project due to a community referendum and widespread concern over environmental implications of construction.

Barratt American recently purchased the Fanita Ranch project area and is currently looking at different development options for the property. The land is zoned for the construction of a business park.

Approximately 118 single-family homes are also under construction throughout the rest of the city, White said.

The higher costs of property for commercial building, coupled with more residential activity, has pushed many commercial and retail developers to consider development in East County.

One of the most productive areas commercially has been the city of Santee.

On the commercial side, the development of a corporate technology business park is under way, White said.

The city completed a joint venture using 104 acres of land owned by the county of San Diego for the construction of a business park offering 2 million square feet of space. The city and county selected Ryan Cos. as master developer for the park.

"We’re hoping to have site plans completed by next spring," White said. "They are working right now on the site plans on the project."

The first phase of the construction included the recent completion of the 100,000-square-foot Hartford Insurance building.

The city is seeing ongoing retail growth with the construction of the 50-acre commercial project at Santee Trolley Square, with 440,000 square feet of retail space.

A 250,000-square-foot commercial center is also under construction on Mission Gorge Road, with some businesses already open.

"In less than one year, 95 percent of those spaces have committed," White said. "The restaurants and the business that are open now are doing excellent."

The city of El Cajon is overseeing the construction of a new Wal-Mart (NYSE:WMT) at Parkway Plaza owned by the Westfield Corp. Inc.

"Wal-Mart has plans into the building division and they are in the final stages of approving those plans," Guyer said. "I would imagine that they are about ready to start construction."

In Lemon Grove, the city has been receiving inquiries for the big box commercial development of land along Highway 94, Mitchell said. He noted that the downtown business area has been doing well and has a low vacancy rate. The city is looking into growing the area and is beginning to brainstorm ways of attracting new businesses, Mitchell said.

Despite strong numbers in loan applications, most businesses in the region are still being hit by high workers’ compensation costs and employee insurance rates, said Terry Saverson, president of the East County Chamber of Commerce.

The issue continues to make it harder to attract new business to the region, she said.

Saverson noted that the decision of a long-time local company, Buck Knives in El Cajon, to leave the county because of the high costs of doing business is a concern, suggesting that more companies might be looking to leave.