Inland Empire Leads US in Major Industrial Leases

The Inland Empire is the top market in the country for big box industrial leases. According to research from CBRE, industrial tenants in the Inland Empire signed 11.6 million square feet in big box product, a total of 14 leases. By comparison, Atlanta was the second market in the country for big box industrial leasing with 7 million square feet in industrial leases signed in the first half of the year. It is no surprise that the Inland Empire was the market leader, considering its proximity to the largest ports in the country and its availability of land.

“The ports of Los Angeles and Long Beach are the preferred routes to enter into the United States, and that is because it is quicker and cheaper to go that route, even putting product on rail,” Dan de la Paz, EVP at CBRE, tells GlobeSt.com. “From a demand standpoint, where last year was the best year ever on record and this year could exceed last year, I am not surprised from a container demand standpoint. The second largest US port is in New Jersey and New York, and they are out of land for development, even including in Pennsylvania. In Southern California, we have the fortunate abundance of land where we can build anywhere from 15 million to 25 million square feet of new warehouse space per year. We have enjoyed that dynamic over the last 30 years, but that is going to stop quickly because we are running out of industrial zoned land.”

Ecommerce and third-party logistics companies led the leasing activity both nationally and in the Inland Empire. Ecommerce users, in general are the biggest occupants of 1 million-plus-square-foot assets. “Ecommerce is the biggest driver. Those users will occupy a bigger building of 1 million square feet plus-or-minus,” says de la Paz. “When you look at the overall percentage of retail that is consumed by ecommerce, the jump is quite substantial. We are definitely seeing food service and 3PL activity. At the end of the day, the driver is really consumer goods.”