The Press Enterprise
The demand for industrial space in Inland Southern California – and construction for all types of commercial properties statewide – is expected to continue to grow in the next three years, a study released this week said.
The report on commercial real estate from the Allen Matkins/UCLA Anderson school predicted growth would be “broad-based across all markets.” More job and income growth will mean that new offices, apartments and industrial facilities could go up across the state.
Also, increased traffic moving through Southern California’s ports will probably mean more demand for distribution centers in San Bernardino and Riverside counties. That sector already has very little vacant space, and developers continue to seek vacant land for new properties in the region.
Earlier this month, Aliso Viejo-based CT Realty Partners announced it had purchased a 17-acre plot on Jurupa Avenue in Fontana for $7.8 million and would construct a pair of distribution centers on the property, including one that will be 212,000 square feet. Construction is expected to start in November, according to a statement.
That underscores that demand exists for large distribution centers in Inland Southern California. A report on the area from Voit Real Estate Services found that 16.2 million square feet of warehouse space was under construction in the second quarter, mostly for buildings that were 500,000 square feet or larger.
Also, work on about 4.7 million square feet of space, more than double the space taken up by Skechers’ 1.8 million-square-foot distribution complex on the east side of Moreno Valley, was completed in the second three months of the year, Voit reported.
This lowered the vacancy rate to 5.6 percent in the quarter. Four years ago, when a faltering economy made the retail world nervous about getting into long-term leases on a large warehouse, vacancies were well above 14 percent.
Bob Wolf, who retired a few years ago from Germania Corp., said he expects development to continue in the Inland region.
“This is still the only place where you can find land,” said Wolf, whose company developed many of the projects in the I-215 corridor in the Moreno Valley and Perris areas.
Wednesday it was announced that one of the new distribution facilities in the Inland region has found a tenant. Yokohama Tire announced it will move into a new 658,000-square-foot facility on Fern Avenue in Chino later this year.
According to a statement, Yokohama Tire, encouraged by growth potential, wants to expand its West Coast operations. The company will relocate from a smaller warehouse in Fullerton.
“The move to the new warehouse facility is just the beginning,” Tom Masuguchi, chief strategy officer for Yokohama, said in a statement.
In the analysis by UCLA, there was a small decline in confidence from a panel of Inland-area experts that was termed “insignificant.” One half of the developers on the panel began an industrial project in the first half of 2014, but 70 percent said they plan to push a project forward in the next 12 months.
Bruce Springer, a senior vice president for Lee & Associates, said as long as there is land, big-box developers and prospective tenants will be interested in the Inland area.
Interest is much less for smaller firms without the global reach of a company such as Yokahama. Springer said many of these companies are worried about the consistency of the economy, and that could continue for a couple of years.
“My sense is they’re not willing to take on more debt,” Springer said of the smaller tenants. “They just don’t want to take that risk.”
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