Last year, office supply manufacturer Safco Products was looking to expand its distribution center near the Port of Los Angeles.
Unable to find anything suitable close to their existing facility after a six-month search, the subsidiary of Liberty Diversified Industries settled on a large warehouse far away on the border of Moreno Valley in Riverside County.
"They wanted 200,000 square feet of Class A industrial space. There was nothing available in the mid-cities area in L.A. County and there was nothing available in the Ontario market," said Mark Kegans, senior vice president with the Ontario office of Grubb & Ellis Co. "So they came clear out to the Riverside/Moreno Valley area."
Safco, whose parent is based in New Hope, Minn., represents just the tip of the latest wave of industrial development that is transforming the Inland Empire and bedroom communities such as Moreno Valley and some say posing a threat to the long-term economic health of Los Angeles County.
Tilt-up warehouse and industrial buildings are going up by the dozen in this 49-square mile city, bolstered by cheap land, easy access to freeways that leaves trucks just an hour or so away from Los Angeles' booming ports, at least during off hours.
Consider the numbers: in the 18 months ending in Dec. 2006, 3.8 million square feet of industrial space was completed and came on line in Moreno Valley. Another 3.1 million square feet is currently under construction, scheduled for completion later this year. And 5.5 million square feet are in the planning stages.
By comparison, for all of Los Angeles County, slightly over 5 million square feet of industrial space is under construction.
Much of the credit for the boom in Moreno Valley is due to the increasingly tight conditions in L.A. County and the western reaches of the Inland Empire, especially Ontario and Corona. With vacancy rates in many parts of L.A. County under 2 percent, the L.A. market has just about completely filled up. And the Ontario/Rancho Cucamonga market that for years has accepted overflow from L.A. is itself filling up, as industrial vacancy rates there have sunk into the single digits.
"Markets like San Bernardino, Redlands, Rialto, Moreno Valley and Perris have become the new catcher's glove for the L.A. market," Kegans said.
But what is L.A.'s problem has become Moreno Valley's gain. And city officials there are using their good fortune to address one of the city's shortcomings: a lack of local jobs.
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