INLAND EMPIRE, CA-”Why is the Inland Empire so favored?” This was the question from moderator Kevin Aussef, senior managing director, capital markets, for CBRE, during the Town Hall Power Panel that kicked off ALM‘s RealShare Inland Empire conference yesterday.
According to Marc Berg, director of development and acquisitions for Thrifty Oil Co., with a population of 24.5 million, a mild climate, the Southern California lifestyle and a large pool of workers, the Inland Empire is a natural place for distributors to locate. “There’s a great base of people to work with, and they’re well educated.” He added that thanks to e-commerce, industrial here is not just distribution—it includes back-off operations as well.
Its proximity to the ports of Long Beach and Los Angeles also make the area a logical region for distribution centers, said Jon DeCesare, president of World Class Logistics Consulting Inc. DeCesare said the close to $1 billion in infrastructure improvements being made to the ports will help move goods from the ports to the hinterlands, so port traffic is coming back slowly. “The Suez Canal route has taken some business from the Southern California ports, but the Panama Canal route shouldn’t.” He added that the mega-ships the ports will be able to handle are larger than the size of three football fields.
Kevin Boeve, regional manager for Marcus & Millichap, said the IE is about “people, people, people. We as investors see the IE as opportunity, opportunity, opportunity.” Total investments in all product categories in the Inland Empire during 2013 was $6 billion, comparable to 2004, he added.
Looking ahead 24 to 36 months, the panelists saw increased rental rates, continuing investment activity, decreased staging time at the ports due to the need to move goods here quickly, a rise in interest rates of 50-75 bps to the 3.5-3.8% range on the 10-year and continuing job recovery. “It’s all about housing and jobs due to the Fed tapering the amount of money it’s flushing into the economy,” concluded Aussef.