LOS ANGELES-The growing world of same-day goods delivery is driving an expansion of new industrial construction in L.A. and the Inland Empire, according to an analysis by Jones Lang LaSalle.
The analysis, which examines speculative product and build-to-suit commitments from Q1 of 2012 through Q1 2013 completions, says 10.8 million square feet has been leased or sold to such companies as Amazon, Hautelook, BMW of North America, Home Depot and Providence Industries.
Of the transactions noted, e-commerce (six transactions), 3PLs and logistics (third-party fulfillment and logistics services, also six transactions), and food/beverage (three transactions) were the leading industries taking space.
All e-commerce deals were based in the Inland Empire (a region located directly east of Los Angeles and embracing the Riverside, San Bernardino and Ontario metropolitan areas), while the 3PLs & Logistics companies accounted for four transactions in L.A. and two in the IE. Some 1.4 million square feet is based in L.A., while 9.4 million square feet is in the Inland Empire.
“We’re drawn to the amount of e-commerce taking space in this market,” says Nicole Page, a broker for JLL’s Industrial Investment Services. “That’s been consistent nationally as well.”
The fulfillment of online orders by e-commerce outlets and big box stores with same-day or next day delivery is driving the construction renaissance, Page says, adding that it’s a trend that’s here to stay.
“We’re at the beginning stages,” she tells GlobeSt.com “We’re seeing Walmart, Amazon, Best Buy – large Fortune 100-200 companies shifting to rapid deployment centers. Technology is changing us, and younger generations will only grow and stay in this manner of ordering and it will become even more robust.”
Page says this construction cycle is different from the past, where some accused developers of over-building. “We’re not making that mistake this time around,” she says, nothing that 65% of product has leased this cycle. “The level of demand is out there.”
Preliminary 2013 Q1 statistics show L.A.’s under construction activity at 3.2 million square feet, with the IE totaling 7.1 million square feet.