The Inland Empire scored remarkable transaction volumes in CBRE’s latest analysis of big-box industrial transactions of 2020. The region was already known for having dense pockets of industrial corridors, but in 2020 experienced a 21% increase from 2019, which equates to 42.5M SF of added space; The most of any region in North America.
“Demand in the IE was driven by third-party logistics companies, which accounted for 34.5% of the total deals in 2020, the report found. General retail and wholesale companies accounted for 28.8% of the deals, and 20.9% of lease transactions were solely e-commerce occupiers.”Bisnow.com
One main lens that industrial operators were looking through in order to cut costs was potentially cutting transportation expenses by 50% by moving distribution sites closer to population centers. Ontario Ranch Logistics Center is home to a current development for Wisconsin-based shipping and supply company, Uline, who closed on a 1.25M SF parcel for distribution consolidation purposes. The drive for e-commerce needs as pandemic norms shifted in-person demand to online experiences caused companies to reconsider supply chains, triggering movement across the board. The Inland Empire is essentially serving that purpose for big-box companies seeking open land that’s relatively close to two global cargo sites in LAX and the Port of LA.
Among other third party logistics companies that made the move to the Inland Empire are All Ways Logistics and Go Plus Logistics, each closing on over a million square feet. Retailers in TJ Maxx closed 991K SF while RH was also over a million square feet. CBRE adds that in order to fully grasp the industrial phenomenon you have to also look at mid-sized industrial deals which also signed leases in the IE.
“Before, companies wanted to negotiate and work out the best deal. But now, they’re just doing whatever it takes to secure the space,” de la Paz said.
Although much of the currently available land in the Inland Empire is being built on experts believe that Industrial in the region will continue to see increases in 2021 with the market potentially seeing vacancy rates below 3%.