Amazon purchases 200 acres in SoCal for $162 Million to build warehouse

HESPERIA – Amazon purchased, at the end of October, 200 acres in Hesperia for $161.9 million. Included in the purchase is the entitlement to build a 2.5 million sq. ft. warehouse, according to Bisnow.

The purchase highlights Amazon’s strategy to expand logistics capabilities and boost economic activity in Southern California.

City of Hesperia public relations analyst Kelly Brady confirmed with Bisnow that Amazon is already working on the site. Grading permits have been pulled and grading is underway at the property.

Real estate investment company Covington Group brokered the transaction.

The group previously developed the Hesperia Commerce Center located on the west side of Interstate 15 and along Caliente Road. Tenants include Maersk, furniture distributor Modway and Peloton at the 3.5 million sq. ft. property.

Construction activity has slowed in the Inland Empire

According to Coldwell Banker Richard Ellis (CBRE), construction activity has slowed in the Inland Empire, one of the country’s largest warehousing markets, and tenant interest is low, as indicated by the drop in pre-leased rates.

Construction fell to 11.6 million sq. ft. in Q3 2024 for the first time since Q2 2013.

“Only 1.3 million sq. ft. broke ground in Q3 2024 while 2.9 million sq. ft. delivered across the market,” says the CBRE report.

Industry experts say the slowdown can be attributed to a host of market and political forces applying downward pressure to new construction.

“The whole process is just exponentially more expensive,” said Canada Pacific Realty Advisors regional leader for the Inland Empire Ian Britton. “It’s really tough for investors and developers to put land into production in a market that has so much standing inventory, a lot of which is good-quality space.”

The firm says another factor holding back development is uncertainty regarding temporary moratoriums on warehouse construction, rules aimed at tracking emissions of warehouse users, and restrictions on where these buildings can be constructed.

The most recent effort at regulating warehouses is Assembly Bill 98, a state measure that takes effect January 2026. The law will control where new warehouses can be built in relation to homes and schools, among other things.

Inland Empire will continue to be one of the premier industrial markets in the world

Despite current challenges, CBRE suggests that the Inland Empire industrial market is approaching a key shift. Demand is starting to outpace the available supply. Soon, new development won’t be enough to meet the growing demand for industrial space.

Amazon is heavily invested in the Inland Empire region – their recent activities include leasing two warehouses of over 1 million sq. ft. each in Ontario and Jurupa Valley.

The region is a critical hub for the company’s operations, as 40% of Amazon’s global goods pass through the twin ports of LA and Long Beach before reaching the Inland Empire.

“With the San Pedro Bay port complex continuing to gain market share in the United States and new leasing activity in the Inland Empire surpassing 10 million sq. ft. for the third consecutive quarter, the demand for industrial space and access to ports and population centers will maintain the Inland Empire as one of the premier industrial markets in the world,” said the CBRE report.