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High Desert could see an influx of warehouse-distribution projects

That’s the opinion of Phil Bensinger, founder of Capital Income Properties Group, a commercial real estate brokerage firm in Jurupa Valley. The lower part of the Inland Empire is running out of space, and the only other logical place for “big-box” industrial projects to be developed is in the Victor Valley. In a recent podcast, Bensinger discussed that possibility and several other issues, including the congestion at the Los Angeles and Long Beach ports and the growing opposition to developing more logistics projects in the Inland Empire.

 

 

Q: Why do you believe that more of the Inland Empire’s logistics industry, especially the “big box” projects of 500,000 square feet and more, will be developed in the High Desert?

A: Because we’re running out of room down here, and the High Desert is the logical place for it to go. There’s still a lot of open space up there. We’re pretty close to being out of land in the Ontario-Rancho Cucamonga market. There is land in Moreno Valley, but much of that is going to be taken up by the World Logistics Center.* So it makes sense for logistics, which is absolutely vital to the Inland Empire economy, to migrate to the High Desert.

Q: Won’t climbing Interstate 15 up to Victorville be difficult for the 18-wheel vehicles that carry the goods?  Wouldn’t it make more sense to develop on Interstate 10, toward the desert, and remain on flat land?

A: That a legitimate question. One reason is the High Desert, in addition to Interstate 15, also has Highway 58 and Highway 395. It has rail transportation, it has the Southern California Logistics Airport in Victorville, and it has a growing population, which means a larger labor pool. People are already moving up there because buying a house down here is so expensive. The High Desert is a more established area.

Q: In what way, specifically?

A: The High Desert already has infrastructure, it has hospitals, it has utilities. Walmart and Target have both been up there for awhile. You can get things built a lot quicker in the High Desert.

Q: When do you believe this move up to the High Desert will happen?

A: Unless something really drastic happens, like seaports opening up in other parts of the country, I think it has to start in the next two to five years and go on for about 10 to 15 years. But it has to happen, because the [lower] Inland Empire is running out of land. That’s what it boils down to.

Q: What will be the affect on property values, both commercial and residential, have on the High Desert once this move happens?

A: It can only drive prices up, just as it has over time in the western Ontario area, Riverside and San Bernardino. [Industrial] land in the Ontario area is now going for about $80 a square foot. In the High Desert it’s substantially less than that. But there will be upward pressure. It can only drive the prices up over time.

Q: What High Desert city, or cities, do expect to attract the most logistics development?

A: I would expect Victorville to be the focal point, at least at the beginning. It’s the closest big city and it has the logistics airport [the former George Air Force Base], which is important because it can accommodate any kind of aircraft. All of the cities up there will get some logistics development, because they tend to be pro-development in general. But Victorville will probably get the bulk of the activity.

Q: The Inland Empire has been called the warehouse of the western United States, but recently people are starting be in opposition. How much opposition do you believe there will be to an influx of warehouses in the High Desert?

A: There will always be people who are in opposition, but warehouse-distribution projects are a good thing for the Inland Empire because they create jobs. A lot of this development has been brought on by people shopping from home, and that’s been accelerated by the pandemic. We all like to shop at our computers now, and I don’t think that’s going to change. It’s going to become part of everyday life.

Q: The congestion at the ports of Los Angeles and Long Beach has been getting a lot of media attention. Some analysts are speculating that there might not be anything to buy at Christmas, that the shelves will be empty because of the backup at the ports. Is that hyperbole, or do you believe that could happen?

A: I think it’s hyperbole. That gets headlines and it sells newspapers, but with a little planning you can still get everything you need on time. That’s been my experience, anyway.

Q: What is causing the backup at the ports?

A: I can’t say for sure. I think it’s a combination of things. One thing is we don’t have enough truck drivers. We need 25,000 more truck drivers now, and over the next 10 years we’re going to need more than one million to keep with the amount of freight that will be coming into Los Angeles and Long Beach. Also, all of stimulus money the Biden Administration is giving out is not helping. Not enough people are looking for work, and that’s causing this to be a little worse than it needs to be.

Q: There have been some reports that things might be improving a little, but the most recent numbers from the ports are not encouraging.

  1. No, they’re not. As of Oct. 27, there were more than 100 ships anchored off Los Angeles and Long Beach harbors waiting to be docked and unloaded.  This logjam is not expected to ease up until next June. The average wait time to be unloaded is three weeks, and getting the freight off the ships is a major problem.

 

 

 

* The proposed 40.6-million-square-foot warehouse complex. When completed, the WLC will feature 40.6 million square feet of warehouse space on 2,610 acres, about the size of 700 football fields.

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