LOS ANGELES—The industrial market in Southern California is thriving, but could shifts in the supply chain disrupt the activity? It isn't likely. Last year, the ports, which drive much of the activity in the Southern California market, slow down as a result of the Hanjin bankruptcy, and while some users temporarily looked for alternative ports, the effect on the industrial market was minimal. In fact, the Los Angeles market vacancy rate has dipped below 1% and the Inland Empire has continued to see strong absorption of new product.

“In Q4 of 2016, the Hanjin Shipping bankruptcy slowed the activity at the Port of Long Beach, causing many retail users to consider alternative logistics chains,” Rick John, EVP of DAUM Commercial Real Estate Services, tells GlobeSt.com. “Ultimately, the brief lull will have minimal long-term negative effects on net absorption, which has been trending positive for several years.”

While slow down the machine behind the Southern California industrial market is difficult, improvements to our transportation systems will only help to fuel more activity. To start, the Port of Long Beach is underway on a massive improvement program, including an expansion of the Gerald Desmond Bridge that will help the port accommodate more trucks and alleviate traffic. Additionally, the City of Ontario has regained the Ontario Airport and plans to redevelop the property. “After decades of negotiations, control of the Ontario International Airport was transferred from Los Angeles World Airports to the Ontario International Airport Authority, which was formed by the city of Ontario and San Bernardino County,” says John. “This transfer of power will likely breathe more life back into the airport, which saw a major decline in passengers and traffic within the last decade.”

While the ports fuel Southern California industrial activity, and particularly urban infill industrial in Los Angeles, the redevelopment of the airport could help fuel a boost in activity in the Inland Empire real estate market. “The result will be new development activity in the area, as the city plans an expansion of airport uses and, likely, the return of international flights,” adds John. “All of this is very good news for the Inland Empire industrial real estate market.”

Instant Insights /

How Do Transportation Shifts Affect Industrial?

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