Inland Empire industrialrents are catching up to Orange County. According to a new reportfrom JLL, the spread between industrial rents inthe Inland Empire and in Orange County has narrowed to just $0.10.The spread has narrowed consistently over the last decade, closingsharply in 2018.

"There are several main factors that are driving Inland Empireindustrial rents including: tenant demand across a majority ofsquare footage segments is outpacing supply; the increase ofconstruction cost and land basis cost for new development;flight to quality from tenant in-migration from surroundingcounties who are unable to find suitable high cube space for betteroperational efficiencies; growth from Inland Empire companies,"Ruben Goodsell, managing director at JLL, tellsGlobeSt.com.

The narrow spread between rents in the two market couldpotentially impact leasing activity. The Inland Empire has been amore affordable market, and has benefitted from a flight toaffordability from the coastal markets. "Increased rental ratescould impact leasing activity in certain size segments," saysGoodsell. "Companies that are more labor and port sensitive maypause and not relocate due to the perceived pricing discount notbeing as wide as it once was.  This may cause thecompanies to either renew at their current location or findadditional 'band-aid' space to minimize cost and disruption inoperations."