What's the Inland Empire's Big Challenge, Opportunity?

INLAND EMPIRE, CA—One of the largest challenges that everyone is facing is the ability to deploy capital. There is more capital than deals available. That is according to Griffin Cogorno, director of client services for Unire Real Estate Group, who recently chatted with GlobeSt.com about the Inland Empire’s challenges and opportunities. GlobeSt.com: What are some of the challenges faces in the Inland Empire commercial real estate market? Griffin Cogorno:  There are a very limited amount of new competitions coming to market. Firms are having an extremely difficult time acquiring properties due to the very competitive marketplace.  We are seeing cap rates continuing to compress and lease rates continuing to rise. These two metrics are pushing per-square-foot prices up to record levels on land and completed assets. Even with Los Angeles being the largest Industrial base in the world at around 2 billion square feet, investors and tenants remain constrained with the amount of available product. It is a great time to be a seller or landlord, and a scary time to be a tenant seeking large blocks of space because of the limited supply. Southern California will always be a great place to deploy capital. GlobeSt.com: What are some of the biggest opportunities in the IE commercial real estate market and why? Cogorno:  Some big wins are going to come to those firms that are finding creative ways to buy separate parcels of land, combine them and entitle them into new larger parcels. There is a major shortage of large land parcels that can accommodate the larger buildings that are more than 500,000-square-feet. GlobeSt.com: Why should CRE investors/users stay or move to the Inland Empire? Cogorno:  The Inland Empire will always have big benefits. If you are a large distribution center and need to distribute goods to the entire Southwest, the IE is a great place for your operation. If your customer is based in Los Angeles, you might need to be closer to the port so your regional trucks can make more deliveries and increase turn times. Los Angeles infill users are willing to give up on the newer, bigger and more functional building in order to be closer to their customer base. Assets in the Inland Empire are cheaper per square foot than by the ports, but companies are now becoming much more sophisticated. Users are analyzing the total all-in cost, which includes the cost of labor, rent, city taxes, drayage per container, and all of the costs that go into an operation. The days of only comparing potential assets by rent are over as it only tells 10% of the story. Tenants and owners are becoming much more sophisticated looking at the macro picture of site selection.