Inland Empire leads nation in major warehouse leases
E-Commerce companies expanded demand for large industrial deals
The Inland Empire area claimed more major warehouse deals than any other market in the country last year.
The submarket west of Los Angeles led all markets with 20 of the top 100 deals in the nation, according to CBRE. It was able to exploit a tight market in the City of L.A. and increasing demand from e-commerce and logistics companies, which signed more major warehouse leasing deals in 2018 than the year before.
The Inland Empire deals totaled almost 19 million square feet. It was followed by a corridor in Pennsylvania, Dallas-Fort Worth, Atlanta and Chicago, CBRE said.
Companies have been more attracted to the Inland Empire lately because it offers cheaper space and less competition compared to Los Angeles’ industrial market. Ivanhoe Cambridge and CapRock Partners, for example, announced plans to develop a $450-million industrial campus in the Inland Empire area last August.
Of the largest 100 industrial leases last year, 61 were signed by e-commerce companies and logistics firms, for a total of 61.5 million square feet. In 2017, those two sectors claimed 52 of the largest leases for a cumulative 43.2 million square feet.
The two types of firms are related in that many logistics companies, specifically third-party logistics providers, handle e-commerce distribution for their clients. But regardless of industry, the largest industrial leases got even bigger last year.
The top 100 deals totaled 19 percent more space than the biggest deals in 2017. Half of the top 100 deals in 2018 were for warehouses with 970,000 square feet or more, reflecting demand for large buildings.
David Egan, CBRE’s head of industrial and logistics research, said the firm expects this type of leasing momentum to continue in 2019. In October, online marketplace Ten-X Commercial predicted that rents in Inland Empire will increase by 6.5 percent through 2022, and that vacancies would almost triple from 3.4 percent to 9.5 percent in the same time frame.