by Jodi Summers
In a recently released list of the top 18 distribution markets, five West Coast markets made the cut. Problem is, there isn’t the warehouse space in LA County to accommodate all of the suppliers who would like to be here.
Top distribution markets are based on access to ports, rail, freeways and roads for trailer and container transportation of all kind and, the ability to then turn around and ship that product throughout the region. Sounds like us…but how to grow in this market as warehouse space becomes more and more precious?
Adhering to the adage that “The Greenest Building is the one already built,” innovators have begun repositioning commercial properties. A perfect example is then56-acre former Albertson’s distribution center in El Monte, which was recently purchased by Goodman Birtcher for adaptive reuse. While El Monte is not a known logistics or warehouse city, the recently purchased site is an A class location based on supply chain criteria.
Why is SoCal so important as a distribution hub, you ask? Louis Tomaselli, senior managing director at JLL has the answer, “…The single most important factor is that SoCal has a population of 22 million people…roughly 60% of all California’s total population, situated in a region that is also home to two of America’s top seaports with major rail connectivity to other major markets throughout the country…our US GDP is 70% consumer driven, so that makes SoCal the most dynamic target for delivery of products today and on go forward. And not to forget, California has way more early adopters who clamor to have the latest and greatest of everything.”
As you’re likely aware, SoCal offers strong leasing fundamentals, strength and security of investment, and long term certainty of your products being available to a growing population. Another big plus is distribution capabilities to other markets. The secret is warehouse space…and we all know for-sale warehouse space is a precious commodity in Southern California, so those ahead of the pack are looking at adaptive reuse opportunities.
GlobeSt.com, praises SoCal as the top gateway market in the country. The theory is as long as you purchase Class A quality or occupy Class A warehouse space, you are certain to be safe even in a slowdown. The experts know that Class A properties always trade even if at a lower price, and always recover first.
“We will see more last mile, same day, next hour delivery warehouses throughout So Cal,” concludes Tomaselli. Look for “a possible conversion of current big box retail stores to warehouse and distribution center locations when the bricks and mortar retail value of those real estate locations becomes a burden.”
E-commerce facilities across So Cal are vital. As more retailers make the conversion, the giant million+ square feet property development will slow down in favor of the smaller distribution centers that can accommodate a broader range of users like third-party logistics providers and traditional warehouse distribution center users.