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REDLANDS, CA–Denver-based ProLogis has acquired a 700,000-sf industrial building that it will incorporate into its ProLogis Park Redlands. A lack of space in Ontario, the most vibrant part of the Inland Empire’s distribution market, combined with a desire to remain close to one of the nation’s strongest industrial meccas, led ProLogis to move eastward into Redlands.

“As we look at the Inland Empire industrial market in total, Inland Empire west has largely become an infill industrial market because there is such a scarcity of supply of existing buildings, and there’s virtually no space left for development,” Mike Del Santo, first vice president of ProLogis, tells GlobeSt.com. “The Inland Empire east has an abundance of land…and all industrial development is now taking place [there].”

The newly acquired distribution center will be the fifth building to reside in ProLogis Park Redlands. It is located at 1895 Marigold St. and was acquired from Rreef for an disclosed amount. The four other distribution centers within the Park total 1.8 million sf. The global provider of distribution facilities and services also recently announced that it has leased one of these distribution centers to Michelin North America. The 260,000-sf center inside the Park is located at 2290 Palmetto Ave. and will be used for warehousing and regional distribution of Michelin products. The addition of this new tenant means that all four of ProLogis’ previously developed buildings at the Park are now 100% leased.

Although Del Santo thinks that expanding eastward is a strategic move for companies looking to stay close the industrial hub, he notes that it won’t be long until Redlands and its surrounding cities are full as well. This would then, he believes, cause companies to move even farther, mostly out into the desert regions.

“It’s clear that there’s a finite amount of land inventory in the Inland Empire and that it’s pushing further east and northeast every year,” he says. “Within the next five years we’ll find ourselves in a very land constrained environment and we’ll have to move beyond – into the low deserts of Palm Springs, and further north, into the high deserts like Victorville. Those areas that are now fringe and speculative markets will play a significant role in the goods market in the next few years.”

Del Santo cautions, however, that with the movement of goods needs to come people as well, which means the movement of transportation and labor – two things Southern California hasn’t historically been great at moving.

“Clearly there will be land constraints and they will make industrial development more and more challenging,” he adds. “But as you push further and further out, real estate is only part of the equation; transportation and labor are the other two. As you push away from ports and population centers, transportation and labor costs become significant factors that need to be considered…[these two factors] clearly outweigh the real estate because the real estate becomes a lower number [in terms of costs] than transportation or labor.”

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