Demand for warehouse space in California’s Inland Empire is picking up as firms set up massive distribution centers

In the Inland Empire, an industrial real estate boom

Demand for warehouse space in Riverside and San Bernardino counties is picking up as firms set up massive distribution centers.

April 12, 2013|By Roger Vincent, Los Angeles Times

Nestled on the windy plains at the foot of the San Bernardino Mountains, once austere stretches of agricultural land have morphed into the country’s most desirable industrial real estate market, and it is growing faster than any other industrial region in the U.S.

Among the many merchants running large-scale operations now are such household names as Inc., Kohl’s Corp., Skechers USA Inc., Mattel Inc. and Stater Bros. Markets.

They come for vast warehouses — some are bigger than 30 football fields under one roof — where they can store, process and ship merchandise such as clothes, books and toys to ever more online shoppers and handle the rising flood of goods passing through the ports of Los Angeles and Long Beach.

The clamor for these big buildings is so intense in San Bernardino and Riverside counties that developers are erecting more than 16 million square feet of warehouses on speculation, meaning they are gambling that buyers or renters will rush forward to claim the buildings by the time they are complete.

“The Inland Empire is to industrial real estate what downtown Manhattan is to office real estate,” said Craig Meyer, head of industrial property brokerage in the U.S for Chicago firm Jones Lang LaSalle. “L.A. has been the hottest market in the world for 10 years running.”

Although the Inland Empire was hard hit by the recession and earned a reputation for mortgage foreclosures, evictions and high unemployment rates during the downturn, the industrial property business has remained a bright spot. And it is now picking up speed.

Southern California, with its enormous population and teeming seaports, has long been a vital hub for major retailers and manufacturers, real estate brokers said. But with Los Angeles and Orange counties essentially full, the Inland Empire with its wide-open spaces is now where the big new buildings are flying up.

Los Angeles County’s industrial vacancy is a mere 2.5%, the lowest in the country, said Kurt Strasmann of brokerage CBRE Group Inc., and some of the priciest industrial property in the U.S. is around Los Angeles International Airport. Orange County is the second-tightest market in the U.S., with 3.5% vacancy.

The two counties and the Inland Empire have a combined total of more than 1.65 billion square feet of industrial property, which is twice as big as the next largest market, Chicago.

Read the full article in the Los Angeles Times



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