Investment in Southern California’s Industrial Properties is Booming

Thursday, April 25, 2019

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Southern California is the nation’s top target for foreign investment in industrial properties.

That’s the upshot of a new report from CBRE Research and Real Capital Analytics which shows foreign investment in the greater Los Angeles/Orange County/Inland Empire region nearly tripled year-over-year in 2018, hitting $910 million.

That accounted for 6.3 percent of all foreign capital flowing into U.S. warehouses, logistics facilities and fulfillment centers last year — the most in any one region.

Southern California was also the top industrial market for cross-border investment over the 2010-2018 period, topping out at $4.8 billion. New York ranked second with $3.3 billion, followed by Dallas ($3.1 billion), Chicago ($3 billion), Atlanta ($2.7 billion), San Francisco ($2.2 billion), Seattle ($1.6 billion), Miami and Phoenix ($1.3 billion each) and San Diego ($800 million).

Here’s a breakdown of where Southern California’s foreign investment dollars came from between 2010 and 2018:

  • China: $1.3 billion
  • Singapore: $1.25 billion
  • Canada: $1 billion
  • Norway: $590 million
  • Japan: $160 million
  • Australia: $100 million
  • Germany: $100 million

The report notes that advancements in e-commerce and omnichannel supply chains have “added value to industrial assets, creating investment opportunities in both suburban locales like the Inland Empire and urban areas like Los Angeles and Orange County.”

The Inland Empire is Booming

Warehouse and logistics activity is particularly strong in the Inland Empire.

In January, Walmart announced plans to open a 340,000-square-foot consolidation center in Colton in July. Using automated technology, it will be the company’s first consolidation facility to receive, sort and ship freight.

EconomistJohn Husing said the Inland Empire added 22 million square feet of industrial net absorption in 2018, most of which is e-commerce related. An equal amount of industrial construction is currently underway.

“We’re filling them as fast as they’re being built,” he said. “I don’t find the numbers in this report to be surprising.”

The western end of the two-county region has seen a heavy influx of Asians moving in, Husing said, and that has created a cross pollination of investors with money to spend, and direct links to China and other Asian nations.

“Right now there is one single flight from Ontario to Taipei and that’s at 90 percent capacity both ways,” he said. “For a startup service, that really tells you something. Southern California for them is the entrance into the U.S.”

Kurt Strasmann, executive management director for CBRE’s Inland Empire and Orange County regions, said domestic investment in the Inland Empire’s industrial operations has been equally strong.

“The largest ports in America are centered here, there’s a dense population within a 60-mile radius and it has the lowest industrial vacancy rate in the nation,” he said.

LA and Orange Counties

Another report from Cushman & Wakefield shows 6.3 million square feet of industrial space under construction in Los Angeles County during the first quarter of 2019, up from 4.2 million square feet a year earlier.

Orange County had 573,000 square feet under construction during the first quarter of this year, down from 1.5 million square feet a year earlier.

Source: Orange County Register

Category: Economic News