Snapshots

Inland Empire construction costs rising, but rent growth keeping developers bullish

Construction costs in the Inland Empire have climbed over the past five years, due to a variety of factors.

December 04, 2019
  • Construction costs in the Inland Empire have climbed over the past five years, due to a variety of factors including rising labor and material costs, the latter of which received an additional price bump as a result of steel and aluminum tariffs. And as the availability of entitled industrial land dwindles, the price of land is increasingly becoming a cost-driver for developers.  With that said, in many cases developers are willing to pay 10 times more for land in the Inland Empire than for comparable land in other markets such as Dallas. Proximity to the ports and denser population bases in the Los Angeles Basin are justifying these higher construction costs and premium land prices. 
  • As retailers continue to reconfigure their supply chains  to meet the growing demands of e-commerce,  historically low vacancy rates continue to push asking rates higher and those rental increases will likely negate future escalations in construction costs. 

Source: JLL Research, Oltmans Construction

Like what you read?