The Inland Empire 2023 Blog
A Hot Logistics Market
Welcome to the Logistics (Inland) Empire! Over the last score of years, the California counties of Riverside and San Bernardino, collectively known as the Inland Empire since the early 20th century, have morphed into one of hottest warehouse and logistics markets in the United States. Named for its inland location just 60 miles west of Los Angeles, the combined factors of easy accessibility, location near the ports serving Asia, inexpensive cost structure (land, labor, livability), and ability to serve one of the largest U.S. population centers have transformed the area into an extremely attractive distribution market. Add the economic forces of Asian countries’ entrances into the WTO, explosion of e-commerce, and company desire for larger integrated facilities (mega deals), the perfect storm has materialized to create a formidable empire, a Logistics Empire. The favorable real estate and population metrics of the Inland Empire are consistently well-documented by the major brokerage houses and economic organizations. The Inland Empire is ranked as one of the top five distribution markets by many real estate and labor metrics.
Figure 1: Inland Empire Expansion Through the Years
Can It Continue?
But has this success created new threats to the continued attractiveness of the Inland Empire? The explosive growth in real estate rent costs, increasing congestion, new moratoriums on development, and developing labor availability issues may be creating an uncertain environment for the continuing growth of the market for warehouse/ logistics facilities in the area. Real estate and population statistics are generally reported and documented on individual, singularly focused markets. Labor has become increasingly more important as a market consideration factor – the real estate theme for companies has transitioned from LOCATION, LOCATION, LOCATION to RENT, RENT, RENT, to now LABOR, LABOR, LABOR. This report will explore the headwinds and tailwinds of the specific warehouse/logistics labor market in the Inland Empire from a site selection perspective, i.e., a comparative analysis of the market versus competing distribution markets. Existing companies and potential new entrants into the market will gain a perspective of the IE versus other markets as they seek to make longer term distribution decisions.
Key Takeaways
The IE remains a key powerhouse logistics empire that continues to attract real estate and occupier investment.
The IE logistics labor market competitive benchmark model shows strong favorability/attractiveness of the IE market.
The headwinds of total operations cost, warehouse saturation index, and location quotient reveal increasing labor risk and the potential value of alternative markets.
An IE labor SWOT survey of market participants reveals, in addition to the traditional strengths, the increasing risks to the continued viability of the market for logistics/warehouse workers.
The alternative markets of Phoenix, Las Vegas/ Reno, High Desert, and Central Valley should be further analyzed and considered as alternative distribution location options based on labor market indexes and total cost modeling.
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