(To read more on the industrial market, click here.)

ONTARIO, CA-ProLogis has acquired two fully leased buildings totaling 855,000 sf here and has signed a tenant to all 700,000 sf of a warehouse in the City of Redlands as the Denver-based specialist in distribution facilities continues to build upon an Inland Empire portfolio that has grown to more than 27 million sf. Michael Del Santo, ProLogis market officer and first vice president of capital deployment, tells GlobeSt.com that the company continues to be on the lookout for acquisition and development targets in an Inland Empire market that ProLogis views as “absolutely unrivaled across the country.”

The two new ProLogis buildings are at the corner of Mission Boulevard and Philadelphia Street in Ontario, in the western part of the Inland Empire, which for years was the main engine of growth in the region’s inventory of distribution space. The Redlands building is at 1895 Marigold Ave., farther east, in a portion of the Inland Empire where developers have migrated in recent years as land for development became scarce in the western part of the region.

The two properties that ProLogis bought, which it has named Mission Distribution Center, include one building of 741,500 sf and one of 113,400 sf. The Redlands building, which it leased to a Fortune 500 company, is part of the 1.8-million-sf ProLogis Park Redlands. The Darla Longo team at CB Richard Ellis represented both ProLogis and the seller of the Ontario buildings, with Bill Heim of Lee & Associates representing the landlord and Colliers International representing the tenant in the Redlands lease.

As Del Santo describes the new ProLogis acquisition and leasing deals, they offer something of a blueprint of where the Inland Empire has been and where it is going in terms of distribution space. He explains that an acute shortage of new land and space in Ontario, Fontana, Rancho Cucamonga and Mira Loma has forced users seeking 100,000 sf or more to look east to places like San Bernardino, Rialto, Redlands, Riverside, Moreno Valley and Perris.

The 700,000-sf building that ProLogis has just leased in Redlands, for example, is in an area measuring about four or five square miles that city officials have designated for warehouse and distribution facilities. The two buildings that ProLogis now has under development in the Inland Empire, scheduled for completion this summer, include a 600,000-sf project in Redlands and 105,000 in nearby San Bernardino.

Although the Denver company’s 27 million sf of space in 73 facilities ranks it as the biggest owner of industrial distribution space in the Inland Empire, Del Santo says that ProLogis sees ample potential for growth in a region that seems to have “an insatiable appetite for distribution space.”

ProLogis is one of many investors and developers who are looking east from built-out Ontario for new opportunities. As Del Santo points out, there has been a great deal of speculation about where the next move will be.

The consensus seems to be that for the next 18 to 24 months, the land for new development will be along the Interstate 215 and Interstate 60 corridors around Moreno Valley, Perris and the March GlobalPort air cargo and distribution center at the south end of the March Air Reserve Base along I-215. The factors driving development to those places include the availability of land as well as infrastructure and freeway improvements that are now under way and expected to be completed in the next year or two, Del Santo points out.

Beyond that, the thinking is that the distribution market will expand east to Beaumont and Banning along the Interstate-10 corridor, which is a major route connecting the L.A. Basin to points east and Florida. Another part of the region priming for distribution growth is the High Desert area around Victorville, with projects like the Southern California Logistics Airport at the former George Air Force Base.

Del Santo says that these future growth areas hold the potential for “a great deal of industrial expansion” as long as user demand continues. ProLogis also own almost 13 million sf of warehouse and distribution facilities in other Southern California locations, but it sees the Inland Empire as the biggest potential growth area in this region because of its availability of land the critical mass it has built as a distribution hub.

“We are looking for more to buy and more to build,” Del Santo says.

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