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Industrial property is not going away, but it’s changing. Overall, only the best located properties or those that are adjacent to existing residential will be conversion candidates. Those industrial buildings safely tucked away in M-zoned districts will be protected. Whether there will be productive businesses for the older buildings is another question. The price difference between low-clear industrial and modern distribution space continues to widen.

At the ports, space is becoming tighter. Room to unload cargo ships, clogged transportation routes, and environmental concerns from residential neighbors are making port expansion difficult and time-consuming. LAX and the Harbor are both suffering from similar conditions. In order to address these concerns three regional airports are vying with each other to become an “inland” port. The goal is to combine new airfreight terminals with rail links from the Harbor to create a gigantic freight complex.

On an air tour I recently visited San Bernadino International (formerly Norton Air Force Base), Southern California Logistics Airport in Victorville (formerly George AFB) in Victorville, and March Inland Port in Riverside (formerly March AFB). Natural growth is already making these locations large industrial hubs. As soon as convergence hits, at least one of these airports will become a new regional/national distribution center.

Coda (Fall 2007): Three years later Norton is practically built out after Hillwood Development Corporation (Ross Perot Jr.) developed the area immediately around the Airport and other major developers, including AMB, RREEF, and PROLOGIS purchased the neighboring orange groves in Redlands. The area around March is well on its way with several 800,000 + square foot buildings including distribution hubs for Tesco and Walgreens. The neighboring communities of Perris, Moreno Valley, and unincorporated Riverside have exploded with building. Victorville is just beginning to have the most impact of all because of the addition of major rail service.

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