INLAND EMPIRE – Inland Empire warehouse tenants who plan to renew a five-year lease or move to another space in the coming months will face some of the nation’s highest rent increases. It would boost the current average of $6.75 per square foot average up to $10.92 a square foot.
According to a CBRE study, it is predicted that tenants who signed a five-year lease in 2016 will pay almost 62% more on a triple-net lease — more than the average 3% annual rent hike and above the expected U.S. increase of 25%.
A triple-net lease requires the tenant to pay rent, real estate taxes, building insurance and maintenance on the property.
The rent increase is attributed to the rising demand for warehouse space since retailers and logistics firms throughout the U.S. have to keep pace with an e-commerce boom that continues to explode as more people shop from home amid the COVID-19 pandemic.
Given the unprecedented demand, warehouse tenants are realizing that their first priority is securing space at almost any price, said CBRE Ontario Executive Vice President Dan de la Paz.
Orange County ranked sixth on CBRE’s list, with an expected rental increase of $15.64 a square foot up from an average of $10.67 per square foot.
Los Angeles ranked 14th, raising the per-square-foot average from $9.72 to $12.96.
New Jersey and Philadelphia came in first and second place with an increase of 63.5% and 62.2% respectively.
Nashville came in last with a predicted 29.1% increase.
“Our vacancy rate for warehouses in the Inland Empire is 0.7%,” said Economist John Husing. “We’re beginning to run out of space to put them here. Now the market is starting to look at the high desert — areas like Victorville and the Antelope Valley.”
