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IRVINE, CA—Forty percent of the 280 million-square-foot industrial base in the Orange County market is located in North Orange County, which includes Anaheim, the biggest city in Orange County, JLL senior managing director Louis Tomaselli tells GlobeSt.com. Recent research from the firm reveals that over the last 24 months, 1.7 million square feet of Orange County's warehouse and distribution space has been leased up by e-commerce and 3PL companies, with nearly 50 percent of all e-commerce leasing activity occurring in North Orange County. We spoke with Tomaselli about this trend and why the region is drawing last-mile industrial tenants so readily.
GlobeSt.com: What has been happening with e-commerce industrial space in North Orange County?
Tomaselli: E-commence is about the first mile near the ports, the middle mile that is delivery of the goods from the port to a central fulfillment center, and then the last mile, which is reaching the consumer. This last-mile facility is the space that is leasing up across all of Orange County to reach the customers, including the high-income households on the coastline. The more-than-1.7 million square feet and growing of warehouse and distribution space leased up by e-commerce and 3PL companies is more dominate in North Orange County because 40 percent of the 280 million-square-foot industrial base is located in that submarket, which includes Anaheim, the biggest city in the OC.
GlobeSt.com: Why has this region been a draw for this type of tenant?
Tomaselli: We are a very high-income and consumer-driven county. Just look at the doorsteps and you see all of the boxes and packages that are being delivered daily.
GlobeSt.com: How do you see this changing as e-commerce continues to gain a larger share of consumer dollars?
Tomaselli: Much research has been published confirming the need for bricks-and-mortar stores where consumers can touch, feel and experience products before buying at the store or online. Many consumers even buy online and pick up in store. The major shift will be with consumers who buy online versus in-store, which is approximately 8% to 10% today and predicted to be 25% by 2020.
GlobeSt.com: What else should our readers know about last-mile distribution in this submarket?
Tomaselli: As we consumers continue our instant-gratification requests for products, the need for major investments in infrastructure will continue, and those costs will increase product prices as the companies pass along those “costs of convenience” back to the consumer.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
