DCG Fulfillment Takes Distribution Center Lease in Inland Empire

NKF Senior Managing Directors Mark Kegans and Ron Washle represented the tenant in the roughly 772,000-square-foot transaction with landlord Black Creek Group.
Redlands Distribution Center - 1300 California Street
Redlands Distribution Center – 1300 California Street

DCG Fulfillment is continuing to grow in California’s Inland Empire, taking up 771,839 square feet of industrial space at Redlands Distribution Center in Redlands, Calif. NKF Senior Managing Directors Mark Kegans and Ron Washle represented the tenant in the lease transaction with owner Black Creek Group.

The property, located at 1300 California St. and built in 2015, is a distribution cross-dock warehouse with 36-foot minimum clearance. The tenant, a family-owned West Coast third-party logistics provider, will occupy the entire Class A facility.

“DCG chose this location because it has good freeway access, ample labor supply and provides state-of-the-art high-cube warehouse for its customers,” Washle said in a prepared statement, referring to the site, which has immediate access to the 10 Freeway.

Industrial market boom

The Inland Empire industrial market continues to be strong. Recently, Davis Partners and TH Real Estate acquired a multi-tenant industrial portfolio comprised of properties in Redlands and Riverside, Calif., with the help of a $15.9 million loan arranged by CBRE. The Redlands properties totaled 126,292 square feet and were fully leased to 37 tenants. The Riverside buildings, with 86,334 square feet, were 93.5 percent occupied by 29 tenants.

NKF’s Inland Empire 1Q2018 Industrial Market report notes that modern space for consolidation or expansion at competitive rental rates continues to be a strong selling point for the market. Nearly 6.2 million square feet of the first quarter’s net occupancy gains came from new construction delivered since 2009. Vacancy was 3.7 percent, well below the market’s 15-year average of 5.9 percent. Net absorption was termed “robust” with 7.7 million square feet after several companies such as Amazon (2 million square feet) and UPS (1 million square feet) took space in the region.

The DCG Fulfillment deal at 1300 California St. was third of the top five lease transactions for the first quarter, coming in behind UPS at 11281 Citrus Ave. in Fontana, Calif., and All Ways, which took a sublease for 888,052 square feet of space at 11640 Harrell St. in Mira Loma, Calif.

The tight vacancy means rents are rising with the average asking rent for the first quarter up 10.4 percent from the previous year. The NKF report notes online retailers, 3PLs and transport-related companies are active in the region and particularly interested in new construction.

Image courtesy of Yardi Matrix