San Jacinto Industrial Development Opportunity

Beaumont/Hemet is a small but rapidly expanding submarket between Riverside and the Coachella Valley. Tenants will welcome the new inventory in a submarket where vacancy trends at 3.3% as of the first quarter of 2024. Industrial buildings line I-10 heading east to Arizona through the northern end of the submarket and proliferate the San Jacinto and Hemet to the south. Developers have been pushed into areas farther from the main population centers of the Inland Empire along I-10, where land is affordable, and highway access to destinations further inland is direct. These cities also offer development unencumbered, compared to other Inland Empire municipalities that are beginning to restrict warehouse construction and limit trucking. A substantial 3.6 million SF of inventory was completed in 2023, nearly all of which was pre-leased. A more moderate 490,000 SF of industrial space remains under construction, equating to 3.0% of existing inventory. The lone building under construction lies within Birtcher Development's Oak Valley Commerce Center. Next to I-10, the development will eventually include four buildings, ranging in size from 457,000 SF to 706,00 SF at largest. Amazon developed one of its first multi-story logistics centers in the United States in Beaumont, a 2.6 million-SF logistics center at 1010 W Fourth Street completed in 2019 and expanded by leasing a 1 million-SF warehouse in the Beaumont Crossroads Logistics Park that completed construction in 2022. Other major tenants include apparel manufacturer Wolverine Worldwide, which leases 720,000 SF at 1020 Prosperity Way, and home fitness products retailer Icon Health & Fitness, which leases 600,000 SF at 630 Nicholas Road. New to the market is Shein Distribution, which leased two buildings totaling 1.8 million SF in late 2022, and United Legwear & Apparel Co, which leased a 1.8 million SF warehouse under construction in the Beaumont Crossroads Logistics Park in mid-2022, which is scheduled for delivery this year. Rents average $12.70/SF annually, and rent growth in 2023 slowed to 5%. Rents are still up 3.2% over the trailing year due to gains early in 2023, but have ticked slightly lower in recent quarters are forecasted to flatline in 2024. Sales activity has historically been limited by the submarket's lack of inventory but could increase in the near term if developers of recently completed buildings sell out.for sale