Inland Empire Industrial Rents Catch Up to OC

Inland Empire industrial rents are catching up to Orange County. According to a new report from JLL, the spread between industrial rents in the Inland Empire and in Orange County has narrowed to just $0.10. The spread has narrowed consistently over the last decade, closing sharply in 2018.

“There are several main factors that are driving Inland Empire industrial rents including: tenant demand across a majority of square footage segments is outpacing supply; the increase of construction cost and land basis cost for new development; flight to quality from tenant in-migration from surrounding counties who are unable to find suitable high cube space for better operational efficiencies; growth from Inland Empire companies,” Ruben Goodsell, managing director at JLL, tells GlobeSt.com.

The narrow spread between rents in the two market could potentially impact leasing activity. The Inland Empire has been a more affordable market, and has benefitted from a flight to affordability from the coastal markets. “Increased rental rates could impact leasing activity in certain size segments,” says Goodsell. “Companies that are more labor and port sensitive may pause and not relocate due to the perceived pricing discount not being as wide as it once was.  This may cause the companies to either renew at their current location or find additional ‘band-aid’ space to minimize cost and disruption in operations.”