Asian-Based 3PLs Target Inland Empire as Tariffs Loom

Third-party logistics (3PL) providers based in Asia have been scooping up large warehouse leases in Southern California as they brace for higher tariffs on goods shipped to the U.S.

Retailers and wholesalers upped their foreign imports into the U.S. last year in anticipation of potential tariffs by the Trump Administration, driving a surge in demand for U.S. coastal industrial facilities from Asian-based 3PLs.

Overall, Asian-based logistics providers inked 78 bulk warehouse leases each encompassing 100K square feet or more in the U.S. in 2024, with most of these deals involving facilities within 100 miles of a U.S. seaport, according to a new report from CBRE. Sixteen of these bulk leases were for lower-rent sublease space that became available in oversupplied markets.

In proximity to the ports of Los Angeles and Long Beach, the Inland Empire was by far the preferred location for Asian 3PLs, drawing nearly three times as many new bulk deals in 2024 as their second choice, northern and central New Jersey.

Asian 3PL providers accounted for 28 bulk leases in the Inland Empire market in 2024, more than 42% of the total of 66 bulk leases inked last year in the two-county region, which borders Los Angeles and spans Riverside and San Bernardino counties.

CBRE projects that Asian 3PL providers “will account for a solid share of overall 3PL leasing activity in 2025 even in the face of increased tariffs on certain foreign imports.”

The influx of Asian bulk deals is a welcome development in the oversupplied Inland Empire industrial market.

The flood of new industrial supply in Inland Empire, which saw nearly 20M square feet of deliveries in 2024 following a record-high 34M square feet in 2023, continued to recede in the fourth quarter, with 1.4M square feet delivered across the market and ground broken for only a 580K square feet in a pipeline that now totals 11.6M square feet.

Leasing rates declined 22% in 2024 in Inland Empire, dropping to $1.16 NNN per square foot in Q4 from $1.49 in Q4 2023, as the market readjusted from the boom during the pandemic, when the industrial vacancy rate dropped to a record low of 1.3% in Q2 2022. Concessions including free rent and lower annual escalations increased in Q4 2024, CBRE reported.

Sublease availability in Inland Empire increased by 790K square feet in the fourth quarter to a total of 16.6M square feet. Most of which was concentrated in IE East, which ended the quarter with 11.2M square feet of space available for sublease. The overall industrial vacancy rate in Inland Empire held steady at 6.9% in Q4.

“Prolonged vacancies and competing sublease availability put downward pressure on rents as landlords competed to get the next deal signed,” CBRE said. “While rents looked to start stabilizing in IE West, the IE East may still have some room to fall before hitting the bottom.”

The Port of Los Angeles moved 10.3M container units in 2024, a 20% increase over 2023, the largest year-over-year surge in the history of the port and its second most active year on record.