A lack of large, empty warehouses, the need for more land and high costs in the L.A. area are leading some industrial tenants to look north and east to meet their space needs better.

And local developers and owners of industrial properties are taking note, building more space to meet the demand.

Take Santa Monica-based Dedeaux Properties. The firm, which has 14 million square feet of land in its portfolio and was founded by baseball coach and businessman Rod Dedeaux, is betting big on the Tejon Ranch Commerce Center. Located at the crossroads of Interstate 5 and Highway 99 – nearly an hour north of Santa Clarita – the area covers nearly 1,500 acres.

Dedeaux Properties Senior Director of Investments Rishi Thakkar said he believed in the “development potential” of the site and pointed to how quickly the existing product was 100% leased as reasons why it was a desirable project.

“We have tremendous respect for the Tejon Ranch Co. and what they’ve built,” he said.

Properties at Tejon Ranch

Dedeaux Properties already has one development at the center and another in the works. The firm, along with Tejon Ranch Co., broke ground earlier this year on a 510,000-square-foot industrial facility at the center.

The development sits on a 24.6-acre site and could be used by either a single tenant or multiple tenants. Slated for completion in 2027, the project features high clearances, 100 dock-high doors, 185-foot cross-dock truck courts, and 4,000 square feet of office space. Fullmer Construction is the general contractor for the new development, while Jones Lang LaSalle Inc. will have the listing.

Thakkar said he expected the new asset to attract strong interest due to the lack of similar products.

“It’s very challenging to amass 25 acres,” he said.

There are some stark differences between this project and the last one Dedeaux worked on at Tejon Ranch, one of which is that this is the first project where the two are in direct partnership; the previous asset Dedeaux purchased from Tejon, developed, and then sold in 2024.

The property – a 233,000-square-foot warehouse and distribution facility at the center – was purchased by a national clothing and textile distributor, which relocated from the Inland Empire. The property was sold months after it was completed.

Jay Cuccia, an executive vice president at JLL who is working with Tejon Ranch and Dedeaux, called the area “great for distribution.”

“The strategic location that it provides is really good access to the north and south major trade corridors of the western United States and, more specifically, California,” he said, adding that 54 million people could be reached within a one-day truck drive from the site, giving it “really good reach.”

Tejon Ranch vs. the Inland Empire

Cuccia said Tejon Ranch had key differentiators from the Inland Empire, an area east of Los Angeles where many industrial users have large warehouses. However, the two areas are comparable distances from the ports, and both have many assets and ample parking, he said.

The Inland Empire has a “mega industrial presence” and “almost its own economy,” Cuccia said. At Tejon Ranch, he said he sees “a lot of bigger credit users who have more complex distribution models” and firms looking to “maximize efficiency.”

In the Inland Empire, Cuccia has seen vacancy rates increase from the incredibly tight rates seen during the pandemic.

Tejon Ranch has better access to Northern California and other markets, such as Seattle, than the Inland Empire does, Cuccia said.

And it is considered a “cheap” alternative to L.A., with rents often 50% less, he said.

Part of a bigger project

The Commerce Center is part of a larger 270,000 acre development that Tejon Ranch Co. calls a “strategic alternative to an increasingly land-constrained Inland Empire, offering available acreage, direct freeway access, expedited building delivery, and a Foreign Trade Zone designation that allows tenants to defer, reduce, or eliminate customs duties on imported goods.”

Cuccia said while some industrial assets in areas like the Inland Empire can get a Foreign Trade Zone designation, most have to go through an application process, which is not the case in Tejon Ranch, which already has the designation.

To date, roughly 7 million square feet of industrial space has been developed at the Commerce Center, and the property is fully occupied. Companies such as Ikea, Nestlé USA, L’Oréal, Caterpillar, Dollar General, Camping World and Famous Footwear are at the center.

“Our partnership with Dedeaux is built on shared conviction, which includes knowing when to move,” Matt Walker, president and chief executive of Tejon Ranch Co., said in a statement. “We’re building into a market where industrial supply across Southern California is limited, and leasing demand has been accelerating. Our new facility is well-timed to meet the market.”

And that partnership is a big part of Tejon Ranch’s plans going forward.

“One of our key approaches is new development in partnership with successful California developers such as Dedeaux on a spec basis,” said Derek Abbott, executive vice president of real estate at Tejon Ranch. He noted that the company has also partnered with firms like City of Industry-based Majestic Realty Co. on projects at the center.

Cuccia said he has been seeing a lot of joint ventures for industrial properties, which help “pool together capital” and “roll out additional real estate development.”

“Given the success we’ve had and the track record with the JVs, it’s definitely something they’d like to continue going forward,” Cuccia said.

Everything at the center is already pre-entitled, which he said means the timeframe to build is “shorter than you’ll find anywhere else in California,” adding that it was very “business friendly.”

Future building potential

Thakkar hopes Dedeaux works on more projects at Tejon Ranch in the future.

“It starts with one building,” Thakkar said.

“We believe in the future growth potential of California,” he said. “L.A. is growing in every direction. It is very land-constrained… For that reason, you’re seeing growth outside of (the city proper).”

The company is working on several partnerships and doing more development for others.

There are 11 million square feet of industrial left to be developed at the Tejon Ranch Commerce Center, and Abbott said he was continuing to “identify great partners to work with.”

“We move quickly and act as a small, narrow team that’s focused on developing these properties efficiently,” Abbott said, adding that he was hoping to build “an income portfolio” and “add value over time.”

He added that in the next few years he sees “consistent production from Tejon Ranch and its partners as far as bringing new buildings forward.”

Brett Dedeaux, the chief executive and managing partner of Dedeaux Properties, called the center “one of the most compelling development sites in the state” in a statement.

“Our joint venture reflects what we believe is a repeatable model: taking advantage of robust market fundamentals in a location that has a strong track record of attracting institutional-grade tenants,” he said.