As Inland Empire Industrial Market Moves East, Residents Push Back

With existing industrial warehouse space filled to capacity and rent hikes on triple-net leases expected to exceed 60 percent this year in Southern California’s Inland Empire, new warehouse development is expanding in the eastern half of the region, which spans Riverside and San Bernardino counties from the Los Angeles city limits to the Arizona border.

CBRE is projecting that industrial warehouse tenants who plan to renew five-year leases or move to another space in Inland Empire will be confronted with the third-largest rent increase in a US market this year, boosting Inland Empire’s current average of $6.75/square foot to $10.92/square foot. 

A record cargo volume of 20 million TEUs at the Port of Los Angeles/Long Beach and surging demand from the e-commerce sector have reduced vacancies at Inland Empire warehouses to less than one percent, an all-time low. Most of the existing warehouse space is in the western half of the region, which has few available sites for large new logistics facilities.

Dermody Properties, which purchased a 54.4-acre site in Ontario, CA last month for a new 1-million-square-foot industrial warehouse, issued a statement describing the site as “one of the last remaining parcels of land in the Inland Empire West that is capable of supporting a building over one million square feet.” Dermody also developed the 1.1-million-square-foot LogistiCenter in Eastvale, CA.

Large industrial warehouses now are proliferating eastward through the San Gorgonio Pass and into the Coachella Valley along Interstate 10. Two proposed projects would bring 3.1 million square feet of new logistics space to Banning and Beaumont, neighboring cities in the Pass that straddle I-10. 

City councils in Desert Hot Springs and Palm Springs recently approved zoning changes to make it easier for developers to build large logistics facilities in an area known as North Indian Canyon. 

As industrial warehouses migrate to the eastern half of Inland Empire, opposition appears to be mounting from local residents concerned about the environmental impact. Residents of the retirement community in Sun Lake, CA, a few miles north of Banning, have put up billboards along I-10 featuring a red stop sign and the slogan “Stop the Banning Warehouse! No more truck traffic, pollution and noise.” 

Facing opposition from environmentalists concerned about the impact to air quality and desert resources, Transwestern Development Co. withdrew an application it made last year to the Palm Springs Planning Commission to build the Eastern Empire Fulfillment Center on a 148-acre site south of I-10 in Whitewater, CA.