Covington Sells Land in the Inland Empire for 1 MSF Build-to-Suit
- Apr 01, 2021
An affiliate of Covington Group Inc. has sold 60 acres of land at Covington’s Hesperia Commerce Center industrial development in Hesperia, Calif., for a build-to-suit project that will house the operations of home and office furniture distributor Modway Inc.
Covington and M.F. DiScala & Co. Inc., co-developer of the 200-acre Hesperia Commerce, sold the vacant land in the coveted Inland Empire region for $20.5 million to Exeter Property Group, which will develop the 1 million-square-foot build-to-suit facility on Modway’s behalf.
CBRE worked on behalf of the new ownership to arrange the transaction, which marks Covington’s first land sale for a build-to-suit project at Hesperia Commerce. The sprawling industrial campus will ultimately feature 3.4 million square feet of state-of-the-art warehouse and distribution buildings, in addition to a 15-acre site designed to accommodate smaller service-commercial industrial facilities. Hesperia Commerce will also offer significant truck parking.
Modway’s new build-to-suit facility will sprout up near the intersection of Interstate 15 and Route 395. It will be more than three times the size of its current distribution center, an approximately 310,500-square-foot building roughly 30 miles away in Fontana. If all goes as planned, the company’s new home at Hesperia Commerce will be up and running come the fall of 2021.
Inland Empire Reigns
In a press release, Covington noted that Hesperia Commerce was conceived to provide industrial users with 1 million-square-foot-plus facilities that can accommodate potential e-commerce needs—and those are just the facilities that have continued to grow in demand in the Inland Empire over the last few years.
The consequences of the COVID-19 pandemic only made the Inland Empire—long one of the tightest industrial markets in the U.S.—even tighter. “The region is a major hub for e-commerce retailers, 3PL operators and almost everything associated with the logistics sector. In many ways, the IE has been the beneficiary of the change in how consumers acquire products during the crisis,” a fourth quarter report by Voit Real Estate Services noted.
The Inland Empire closed 2020 firing on all cylinders, with positive net absorption totaling 5 million square feet for the fourth quarter. The average asking lease rates reached a new high-water mark and the vacancy rate dropped to just 3.1 percent in the face of record levels of spec development and a constant flow of new deliveries, according to the Voit report. Hesperia performed even better on vacancies, with a rate nearing just 2.3 percent.
All signs indicate that the Inland Empire’s industrial market will continue to thrive. “I do believe this trend will persist as availabilities continue to decline and it becomes increasingly difficult to find Class A product,” Juan Gutierrez, senior vice president & partner at Voit Real Estate Services, wrote in the firm’s fourth quarter 2020 Inland Empire report. “The Inland Empire is one of the few locations where developers can find land to build the facilities that today’s users are demanding.”