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Inland Warehouses Overtake Landscape

Updated: Oct 8, 2021

By Jeff Horseman

The Inland Empire supply chain doesn’t just flow, it gushes.

Logistics dominate the former citrus powerhouse where almost 5 million live. For better or worse, the region’s present and future are tied to mammothwarehouses and an 18-wheeled armada connecting the fruits of overseas labor to shopping aisles and doorsteps.

That change ramped up during the coronavirus pandemic, which spiked demand for online shopping and warehouses to store goods bought virtuallywith one-day delivery. In 2020, the top 500 North American retailers generated $849.5 billion in online sales, up 45.3% from 2019 and the biggest jump since 2006, Forbes reported.

A number of warehouses have been built in the past few years in the vicinity of Nevada Street in Redlands. Because of a variety of factors, the Inland Empire has become a hub for the logistics industry, which has led to job growth but also frustration among certain residents.

“What we see happening on the ground today is a result of our choices as a society, to shop more online, to change the way that we acquire products,” said Juan Perez, Riverside County’s chief operating officer.

The story of the Inland warehouse boom has chapters in geography, globalization and demographics; take out a chapter and the ending changes. It’s a long-running drama pitting those who see logistics as the best option for a low-skilled workforce against those who blame warehouses and the dieselbelching trucks filling them for poisoning the air, clogging freeways and paying low wages.

It’s also a story that — like the logistics industry — keeps growing:

• From 2004 to 2020, the Inland logistics footprint roughly doubled to almost 600 million square feet, according to commercial real estate firm CBRE.

• The number of Inland “big box” distribution centers grew 54% from 463 in 2009 to 711 in 2020, according to Statista, a market and consumer data firm.

• In 2019, the Inland Empire was home to 21 of the nation’s 100 biggest logistics leases, the California attorney general’s office reported.

• An estimated 40% of the nation’s consumer goods come through the region, Bloomberg News reported, and the logistics industry employed almost 1 in 8 Inland workers as of early this year.

• Amazon is Riverside County’s second-largest employer, according to the county budget report.

These examples don’t include the planned World Logistics Center, which will bring 40 million square feet of warehouse space to eastern Moreno Valley.

The Inland region is “one of five or six locations like this in the world” for logistics, said Paul Granillo, president and CEO of the Inland Empire Economic Partnership. “The question we as a region need to grapple with is how do we take advantage of the economic engine that this sector is for us.”

Logistics is “a net positive for San Bernardino County” and supports other parts of the local economy, San Bernardino County Supervisor Curt Hagman said.

But the industry has downsides, he added.

“I drive on the freeway and there’s three lanes of trucks in front of me,” he said.

Other options?

In fighting new warehouses, residents often ask why something else — a shopping center, for example — can’t be built instead.

Jeff Greene, chief of staff to Riverside County Supervisor Kevin Jeffries, said a developer reportedly looked into building an outdoor retail plaza similar to Rancho Cucamonga’s Victoria Gardens in Mead Valley, a rural unincorporated area where warehouses are popping up.

“The population density (and) the demographics just don’t come anywhere close to penciling out,” Greene said.

While cargo planes fly to Ontario and San Bernardino, Inland logistics owes its scale to the ports of Los Angeles and Long Beach in San Pedro Bay. Both ports are about 65 miles from Riverside.

Unlike San Francisco and Seattle, San Pedro Bay has the geography and infrastructure to handle a large volume of seaborne cargo, said Juan De Lara, an associate professor of American Studies and Ethnicity at USC and author of the book “Inland Shift: Race, Space and Capital in Inland Southern California.”

The rise of Asian manufacturing in the past 40 years “created an incredible flow of goods coming through San Pedro Bay,” said Nick Vyas, founding executive director of the Randall K. Kendrick Global Supply Chain Institute and USC’s Marshall School of Business.

“As we look at this volume coming in, a lot of this volume had to be absorbed,” Vyas said. “We needed the warehouse spaces so when goods come in, we can store them.”

At first, that meant portadjacent warehouses. But Los Angeles County started running out of logistics space, and in recent years, L.A. County warehouses have been converted into lofts and workspaces, said Jay Dick, a CBRE executive.

Troy Plotkin, vice president of operations for Approved Freight Forwarders, a shipping company in the City of Industry, called the Inland Empire “the next closest place, really, to get freight out of the port and yet stay in this very large clientele base.”

At least 20 million consumers are within a twohour drive of the region, he said, adding that Inland warehouses can be built with higher ceilings, which cuts costs because goods can be stacked higher.

Many pathways

As the logistics industry moved eastward, it followed existing roads and rail lines. The launch of the U.S. interstate network in the 1950s led to the 10 Freeway, which runs from Santa Monica to Florida, and the 15 Freeway, which flows Inland and through Las Vegas to Montana.

A 1964 renaming of highways christened what is now the 60 Freeway connecting Riverside to L.A. The 10, 60 and 15 converge in Mira Loma, a neighborhood in Jurupa Valley that was an early hotbed of warehouse activity in Riverside County. In the 1800s, Inland railroads replaced stagecoaches and brought in settlers and tourists, said Juliann Emmons Allison, a UC Riverside professor studying sustainability and environmental policy. But starting in the 1980s and continuing through the early 2000s, railroad companies spent tens of millions of dollars upgrading their facilities to move large volumes of goods more efficiently, De Lara said.

All that was needed was flat, vacant land — “You can’t build a warehouse on the hills,” Dick said — and the Inland Empire had plenty of it, along with a ready-to-go workforce.

A pro-logistics argument is “we have the least educated workforce in Southern California,” Greene said. “These people aren’t going to work in biotech … so therefore, warehouses are the best thing they can get. And that’s been kind of their pitch.”

Roughly a third of Inland households are under the $50,000-income level, compared to 25% for Orange County and 29% for San Diego County, 2019 census data shows. About 20% of residents in Riverside and San Bernardino counties have a bachelor’s degree or higher. In Orange and San Diego counties, it’s 41% and 40%, respectively.

The Inland area’s need for jobs grew in the 1980s when Kaiser Steel closed in Fontana and the 1990s when Norton Air Force Base closed in San Bernardino and March Air Force Base downshifted to become March Air Reserve Base.

Norton became San Bernardino International Airport and, in 2016, the agency responsible for redeveloping Norton announced that the 9,000-plus jobs lost in the closure had been restored. Amazon acc ounted for about a third of them. W a r e house jobs are available in the Inland Empire “but it do e s nothing to change (the community) if you keep bringing the things here that are lower wages,” Allison said.

Catherine Gudis, a UC Riverside history professor, sees parallels between warehouse workers and those who toiled in farm fields a century ago. “It’s an exploitation of labor for the purposes of gaining the greatest value out of the cheapest possible production of the commodity,” she said.

There’s a line of thought that the Inland Empire “has always served the coastal communities,” Allison said.

“So land becomes more expensive there and those areas become places where people live, and these Inland counties become places that support those people,” she said. “So there’s also kind of an extension there that you’re not going to put your warehouses in Irvine. You’re going to put them out here.”

It’s no coincidence that whiter, wealthier communities are less likely to have a warehouse next door, Inland social justice activists said.

In May, the South Coast Air Quality Management District board, which is tasked with helping Inland residents breathe easier in a region with routinely poor air quality grades, passed new regulations targeting pollution from warehousebound diesel trucks. In making their case for the new rules, district officials said those living within half a mile of a warehouse “are more likely to include communities of color.”

Those whose shopping habits support warehouses are farthest from them and “people of color get all the burden,” said Andrea Vidaurre, policy lead for the Inland-based People’s Collective for Environmental Justice. The disproportionate number of warehouses in minority communities is “environmental racism,” Vidaurre said, adding that 80% of the warehouses her group studied were in zip codes where mostly people of color live.

More than half of residents in Riverside and San Bernardino counties are Black or Hispanic, compared to 39% for San Diego County and 36% for Orange County, according to 2019 census numbers.

Granillo defended the logistics industry and its growth.

“What is the remedy? We’re not gonna purchase anything? Fulfillment is the new retail,” he said. “It’s growing at a much faster rate than anyone predicted. This is a reality that we have to deal with. This is a new way for people to purchase things. We need to look at the complexity of what this sector is comprised of and not just run to our corners and point fingers.”

Early vision

While geography and demographics laid the groundwork for logistics, so did land-use policy, said Jeffries, who was first elected Riverside County supervisor in 2012.

“I would argue that the county for many years had the welcome mat out for logistics and perhaps you could argue still does,” said Jeffries, whose district, especially south of Riverside and west of the 215 Freeway, is ground zero for logistics.

For example, Jeffries said his county’s development impact fees, levied on development projects to offset their burden on public services, incentivize logistics.

Perez, Riverside County’s operations officer, said fees are based on studies of how growth affects roads and other public services. Logistics projects fees “proportionally … are somewhat lower” than for other projects, Perez said.

It’s not an apples-to-apples comparison between warehouse traffic and shopping center traffic, Greene said.

“All the warehouse vehicles are slow, giant … diesel- y vehicles,” he said. “Getting stuck behind a passenger vehicle … isn’t nearly as annoying as getting stuck behind a semi.”

Riverside County’s development fees are being reviewed and new rates should be established by year’s end, county spokesperson Brooke Federico said.

San Bernardino County does not have development impact fees, but looks at project impacts on a caseby- case basis, spokesperson David Wert said via email. Land Use Services Director Terri Rahhal said in an email that county zoning rules “are not organized to make it easier or harder for particular land uses.”

Logistics projects are in a land-use category that requires conditional-use permits, which have more public transparency as well as “more intensive design review and conditions of approval,” Rahhal added.

Developers also benefit from decades-old zoning maps that make it almost impossible to reject warehouses because they’re an allowed land use, Jeffries said.

Warehouses “seem to have zero obligation to be a partner in the community to make those communities better,” he said. “You can come in, you can build your big ugly boxes, you can clog all the roads with tractor-trailer rigs. But you don’t have to really help with anything.”

In 2019, Jeffries proposed a Good Neighbor Policy to help unincorporated communities with large warehouses. Among other rules, the policy called for trucks to be limited to five minutes of idling, truck bays and loading docks to be at least 300 feet from homes and lighting to be directed downward into a project’s interior.

Riverside County’s Board of Supervisors passed the policy by a 3-2 vote, but not before changing it so supervisors could decide whether to enact the rules in their districts.

Looking ahead

There are glimpses of an Inland future beyond logistics.

Inland leaders hope the California Air Resources Board headquarters under construction in Riverside and medical schools at UC Riverside and California University of Science and Medicine in San Bernardino — the first classes enrolled in 2013 and 2018, respectively — will foster the types of high-paying, high-end jobs enjoyed in coastal California.

Renewable energy could be key to Riverside County’s future economy, Perez said, noting there’s demand for clean energy and “we’ve got land and a lot of sunlight.”

Meanwhile, the supply chain shows no signs of slowing down.

“I think (logistics) is a major employer and will continue to be,” Granillo said.

“As we look at the next generations of logistics to create even better-paying jobs, more technical jobs … it’s an opportunity to bring companies doing innovative work in the logistics area to our region.”

Hagman, the San Bernardino County supervisor, said logistics “is here to stay … as long as consumers want to buy cheaper goods (and they’re imported from) other countries that don’t have the same rules that we have.”

“Is it Silicon Valley? No it’s not,” he said. “That’s our job” to diversify the region’s economy and bring a mix of entry-level and highpaying jobs. Plotkin, of Approved Freight Forwarders, lives in Moreno Valley and commutes to the City of Industry every day.

Truck traffic frustrates Plotkin, too, but he believes “there’s a lot of things the (logistics) industry is doing responsibly … they’ve worked on improving the vehicles and emissions” and logistics companies volunteer in the community and donate to local charities, often without fanfare.

Still, Jeffries remains frustrated by the number of warehouses rising, saying “we’ve done this to ourselves.”

“We’re accepting what should not be high on our list an industry — yeah, we’ve got to have it out here — we’ve got 2.4 million customers (in Riverside County),” he said. “But do we have to be the center of the universe of logistics?”

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