E-commerce has shifted the dynamics of consumer demand and, thus, occupier supply chains, perhaps more than any other force in the last half century. This shift has been a boon to industrial real estate demand as occupiers need more warehouses in more locations to get products to consumers quickly. With the exponential growth of e-commerce, which requires that warehouses stock a larger variety of products and ship directly to consumers based upon dynamic demand, larger facilities continue to be built around the suburbs of major population centers.

Additionally, as consumers increasingly expect that their e-commerce orders are fulfilled and delivered in two days or less, demand for closer “in-town” smaller final-mile fulfillment centers is exploding. It is this segment of the supply chain – getting the order to the end consumer – that overwhelmingly is the most expensive portion of the total transportation costs. Thus, to mitigate the final-mile transportation costs, occupiers find it more effective to locate closer to their consumer base, despite facing higher lease rates.

With nearly 20 million inhabitants sprawled across nearly 35,000 square miles, the Los Angeles Basin markets of Los Angeles County, Orange County and the Inland Empire region of San Bernardino and Riverside Counties (the Basin) presents a unique set of both opportunities and challenges. No market in the country is in higher demand or provides the most opportunity while at the same time has the most inventory constraints in servicing the final-mile than the Los Angeles Basin region.

Key takeaways:

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