E-commerce Demand Prompts Warehouse and Distribution Near Freeways

Supply chain interruptions and extraordinary demand for goods through e-commerce have triggered the need for warehouse and distribution space near major freeways connecting the ports with end-users. Manufacturers, retailers and distributors are all trying to keep more goods on hand to combat the delays and backlog of goods coming in from the ports.

Lee & Associates recently released its fourth quarter 2021 industrial market report for manufacturing and distribution buildings in the East Valley market of Southern California’s Inland Empire. The report, prepared by Caroline Payan, director of marketing and research of the Lee & Associates Riverside office, says the industrial market continued its unprecedented growth during fourth quarter 2021 despite new pandemic variants and stagnancy in other sectors.

Gross absorption for 2021 totaled 25.3 million square feet, continuing on the heels of the record-breaking absorption performances in 2020 of 22.7 million square feet and 2019 of 21.2 million square feet. Gross activity in the fourth quarter of 2021 was 12.7 million square feet, with investment purchases and lease renewals accounting for 39.2 percent of the total. Fourth quarter 2021’s absorption figures were 7.7 million square feet, compared to 4.3 million square feet during the same period last year. With total absorption for 2021 outpacing the previous year, the industrial market is expected to hold strong into 2022.

Vacancy in nearly every submarket and size segment is at all-time lows, and price and rent growth continue to outperform.