X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

IRVINE, CA-The story of warehouse and distribution development in the Inland Empire for many years was almost solely the story of huge buildings erected in and around Ontario, which has grown into one of the world’s largest concentrations of modern logistics buildings. But with Ontario area land becoming scarce, companies like Chicago-based First Industrial Realty Trust are looking elsewhere in the Inland Empire to meet the growing demand for the ever-larger distribution facilities—from corporations and logistics firms.

First Industrial has amassed a portfolio of more than 1,300 acres of mainly raw land for some 26 million sf of such future development in two of the places in the Inland Empire where experts agree that the newest and biggest waves of distribution space development will occur: Along the Interstate 215 Corridor from Moreno Valley South to the City of Perris and in the High Desert region. Phil Bowman, Irvine-based senior vice president with First Industrial, tells GlobeSt.com that the Chicago-based REIT expects to develop its 26 million sf over the next 10 years or so.

First Industrial already owns about 2.5 million sf in Los Angeles County, where it focuses on primarily on infill repositioning and redevelopment, and about one million sf of existing space in Orange County and the Inland Empire. Bowman, who also maintains an office in Riverside where First Industrial’s development group is located, tells GlobeSt.com that the company expects to break ground by the third quarter on a spec project that typifies the product users are seeking today. It’s a 770,000-sf building under one roof called the Nandina Distribution Center II. The development site is at the northwest corner of Indian and Nandina.

Bowman explains the primary reasons for First Industrial’s Inland Empire strategy:Ontario and the West Inland Empire has become a mature market, and there is not that much land left to develop a building larger than 400,000 sf or 500,000 sf. The demand larger buildings like First Industrial’s Nandina Center has increased in the past few years as the region’s population has risen, demand for distribution facilities has grown as international trade through the local ports has increased, and the reconfiguration of the global supply as corporations and logistics firms consolidate into fewer but larger facilities has pushed the demand for large modern distribution facilities.

“We believe that the long-term drivers of import and export trade will expand significantly, that population growth will continue and that the supply chain reconfiguration will continue,” Bowman explains. In addition, he points out, “The coastal counties have a lot of functionally obsolete industrial product, so the logistics and distribution firms will continue to migrate to the Inland Empire for more efficient buildings.”

First Industrial is moving forward on all of its entitlements and land development in order to be ready to build as demand warrants, both speculatively and on a build-to-suit basis, and the firm will sell land to users who want to develop their own facilities. Bowman points out that First Industrial’s land investments and related developments are being financed principally through the REIT’s joint venture with the California State Teachers’ Retirement System, the second-largest public pension fund in the US. He notes that the First Industrial partnership with CalStrs is more competitive than many other investors and developers in today’s capital markets environment because so many others rely on debt and are having a hard time finding financing. “We close on an all-cash basis, so we’re in a good position to make acquisitions,” the First Industrial SVP explains.

The partnership of First Industrial and CalStrs acquired nearly 900 acres of its 1,300 acres of Southern California land in 2007 through 16 transactions. Year to date, it has acquired an additional 400 acres. Its holdings along the 215 Corridor are located from Moreno Valley to South Perris, on both sides of the interstate, and its High Desert land is all within the Apple Valley Industrial Specific Plan area. Asked if First Industrial has any plans to acquire additional land in the Inland Empire, Bowman says, “We’re always looking.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.