Snapshots

Surprise! Industrial rents in IE are closing the gap with Orange County

The Inland Empire’s industrial boom has been catalyzed by the fact that the Orange County and Los Angeles industrial markets are undoubtedly high cost markets.

March 02, 2020
  • With the e-commerce boom, the proximity to the Ports of Los Angeles and Long Beach, which make up the largest port complex in the nation, as well as to the densely populated areas of the SoCal region, industrial demand in the area as a whole has boomed.
  • Many occupiers have been incentivized to relocate their warehouse and manufacturing operations to the IE and bear the higher drayage costs for the benefit of acquiring space in the more affordable market.
  • However, the chart above shows that for leases 50,000 square feet or greater, IE is closing in on the cost difference as overall industrial demand in the SoCal region continues to thrive.
  • Because Orange County is extremely built-out and is limited by the lack of available and desirable industrial product, rent growth has been restricted while this is not the case with the neighboring IE market. In the past 10 years, first year lease rates in the IE have increased by 154.5 percent! In Orange County, industrial lease rates have also increased significantly but with a 10-year increase of 69.1 percent, it is less than half of the increase of the IE.

 

Source: JLL Research