Growing Tides: Ports, Logistics & the Evolution of Space

By Dennis Kaiser

Connect Inland Empire brought together more than 300 real estate professionals in Chino for a full afternoon of CRE conversations and networking. Three deep-dive panel discussions featured some of the region’s top CRE leaders, who shared insights on commercial real estate news trends shaping the market. The engaging discussions ranged from a conversation about investment prospects for the Inland Empire, to the challenges facing developers to how port activity is driving the market.

The Port of LA just hit nine million TEUs, a new record for North America, and SoCal has seen a resurgence in manufacturing, filling up vacant space in the region. The logistics industry is beginning to see new technologies and information portals allowing them to gain access to new data, and at a much faster pace. Leaders discussed how port activity is driving the market, what logistics companies are doing to keep up, and the expected future challenges and opportunities.

The City of Ontario’s Bradley Gates says the Inland Empire is “one of the largest logistics markets in the country” that carries a “huge impact.” The recent shift of companies to e-commerce and logistics facilities is “unheard of”,  and has been a “game changer as more retailers turn to an e-commerce mode.” He notes the city is working to meet the logistics industry’s more technical workforce requirements with programs at schools and colleges that keep the pipeline full with trained workers.

Lee & Associates’ Jeff Rinkov says they are seeing more demand for “last mile” facilities in urban infill markets that are frequently landing in the 25,000-square-foot to 50,000-square-foot range. Rents are “up significantly” in the Inland Empire, and that will impact logistics occupiers. They are making “investments in infrastructure to create more efficient facilities” as a way to balance out “elevated occupancy costs.”

World Class Logistics Consulting, Inc.’s Jon DeCesare says the logistics industry is growing because retailers, such as Kohl’s and Best Buy, are deferring to 3PLs to handle more and more of the tech aspects of moving goods. That’s requiring logistics companies to make significant investments in advanced technologies. “Clearly, Los Angeles has been an innovative leader and they’ve had to because of the significant amount of [cargo] volume they handle,” he said. The port has teamed with GE to digitize maritime information, a move no other port has done for the trade community, and it has introduced a Pier Pass system that helps expedite goods getting out of the terminals.

Port of Los Angeles’ Jack Hedge says the innovations introduced at the port, such as the new GE Portal and the Pier Pass system, are helping to make the entire terminal facility “more efficient” and is creating a “more transparent logistics process.” The public/private partnership with GE consolidates shipping data and provides a 14-day advanced view into schedules so BCO’s (Beneficial Cargo Owner, the importer of record that physically takes possession of cargo at destination) know where the ship is and when it will arrive. Then, once goods are off the ship, the system shows when it is ready to be picked up and where it is at the terminal. On the horizon, a short haul rail line is being explored to connect the Port of LA to the Inland Empire, similar to the Alameda Corridor.

Port of Houston Authority’s Shane Williams notes Houston is experiencing “organic growth” in the ports as a result of population and job growth in the state. As a result of the recent hurricane, he expects a delay of six months for the plastics sector to resume production and delivery of product. But, as the recovery effort picks up momentum, the port should experience a boost “through next year” as consumers buy home goods to replace damaged items and repair storm damaged houses.

For comments, questions or concerns, please contact Dennis Kaiser