Inland Empire, Dallas and Atlanta industrial leasing along freight corridors

What to take away

Three freight markets, three different drivers of warehouse demand

These three regions do not compete for the same tenant.

The Inland Empire sits between the ports of Los Angeles and Long Beach and a consumer base of roughly 20 million people. Demand comes from importers who need the box off the dock and onto a truck fast. That is a drayage story, not a rail story.

Dallas is inland. Freight arrives by truck and intermodal rail, then gets sorted for Texas, the Plains and the Midwest. Demand tracks population growth and the cost of moving goods one more day by road.

Atlanta is the Southeast gateway. It reaches Florida, the Carolinas and Tennessee overnight, and it now pulls cargo from the Port of Savannah as well as from West Coast ports. Demand comes from regional distributors and e-commerce fulfillment.

One consequence: a tenant comparing all three is not comparing rents. It is comparing which cost it wants to carry, port drayage, inland linehaul or Southeast reach.

Inland Empire: port access, drayage cost and the last-mile premium

Inland Empire industrial leasing starts with the ports. A building within a short drive of the San Pedro Bay complex saves a drayage move, and that saving is capitalized into rent.

Drayage is the short truck haul between the marine terminal and the warehouse. Port drayage warehouse cost includes the container move, chassis, terminal fees and the driver's time. When terminals back up, that cost rises faster than rent does.

A typical drayage move from a San Pedro Bay terminal to a warehouse in City of Industry or Ontario runs roughly $300 to $600 per container, with chassis and terminal fees in that figure. Terminal turn time, appointment rules and fuel move the number.

Because of this, tenants in the Inland Empire often accept a smaller yard and a taller building. They trade land for cubic capacity. A high-cube building lets an importer hold more inventory per acre near the port.

Last mile distribution lease economics in this market are unusual. The region is both a port market and a last-mile market. A tenant can run transloading on one side of the building and parcel sortation on the other.

Submarkets separate along the 60, 10 and 15 freeways. Buildings closer to the ports carry a port premium. Buildings further east, toward Moreno Valley and Perris, trade that premium for cheaper land and a longer drayage run.

The named submarkets are City of Industry, Ontario and Rancho Cucamonga at the top of the range, with Fontana, Moreno Valley and Perris below them.

Typical asking rents for modern bulk have run about $14.00 to $21.00 per square foot per year, triple net. Rexford Industrial, Prologis and Watson Land Company hold large Inland Empire portfolios, and AllianceCalifornia in San Bernardino is a named park to check.

The practical test for a tenant is the drayage lane, not the map. Measure the actual drive from the terminal gate to the dock door at the hour your trucks run. Freeway distance understates the cost when a bottleneck sits in the middle. For a structured way to compare those lanes, see our industrial space checklist.

Dallas: inland distribution, labor supply and the I-35 and I-45 corridors

The Dallas I-35 and I-45 corridors do different jobs, and the lease terms reflect it. I-35 runs north to south, from the Mexican border through Austin and Waco to Dallas, then on toward Oklahoma and Kansas.

I-45 runs southeast to Houston. A building on that corridor can serve both metros, which matters for distributors covering Texas as a single region.

Dallas warehouse lease terms are shaped by two things the Inland Empire does not have in the same way: abundant flat land and a deep warehouse labor pool. Land is cheaper, so buildings spread out and yards are larger.

That changes the negotiation. A Dallas landlord can offer more trailer parking and more dock doors per square foot, because the site allows it. The tenant's bargaining position shifts to labor.

Labor supply is the real constraint. A distribution center needs pickers, forklift operators and supervisors within a reasonable commute. Submarkets with dense residential growth nearby fill shifts more easily.

Southern Dallas County, including Wilmer and Hutchins, has absorbed large blocks of space because land and labor line up. The Alliance area in the north draws from a different labor shed and serves a different freight pattern.

The named submarkets are the Inland Port of Dallas around Wilmer, Hutchins and Lancaster, plus Mesquite and Grand Prairie, and AllianceTexas in north Fort Worth.

Typical asking rents for modern bulk have run about $7.20 to $11.40 per square foot per year, triple net.

Dallas has no marine terminal, so the comparable cost is the move in. A loaded dry van from Los Angeles to Dallas covers roughly 1,400 miles. Typical spot pricing has run about $1.50 to $2.50 per loaded mile, which puts that trailer at roughly $2,000 to $3,500.

Local container drayage from the Union Pacific intermodal terminal in Wilmer, or from the BNSF Alliance facility, typically runs about $200 to $450 on a 30 to 50 mile move. Prologis, Hillwood and Trammell Crow Company are among the developers with projects in these submarkets.

For a tenant, the Dallas question is rarely port access. It is how many people you can hire at the wage you modeled, and how far they will drive. Our guide to industrial space requirements walks through how to size that labor draw before you tour.

Atlanta: Southeast gateway, the I-85 and I-20 corridors and port of Savannah links

The Atlanta I-85 and I-20 corridors split the market into a northeast side and a south side. I-85 runs northeast toward Greenville and Charlotte, which suits distributors serving the Carolinas.

I-20 runs east toward Augusta and Columbia and west toward Birmingham. It is the corridor that connects Atlanta to the Port of Savannah link by way of I-16, and it also reaches the Port of Charleston.

Atlanta distribution space benefits from that dual port access. A tenant can pull cargo from Savannah and from the West Coast, then serve the Southeast from one building. That hedge is worth real money when one port congests.

Savannah has grown as a container gateway, and inland Atlanta has absorbed much of the resulting warehouse demand. Buildings along I-20 west of the city, and along I-85 northeast, have captured it.

The market also carries a labor advantage: Atlanta has a large logistics workforce and a strong trucking base. The constraint is topography and zoning. Sites are not as flat or as plentiful as in Dallas.

The named submarkets are Gwinnett County around Buford and Braselton on I-85, Douglas County around Lithia Springs on I-20 west, and Henry County around McDonough on I-75 south. Typical asking rents for modern bulk have run about $7.80 to $12.60 per square foot per year, triple net.

A container from Savannah covers about 250 road miles to reach inland Atlanta, by truck or by rail to the Appalachian Regional Port and then by truck. A typical container move on that lane runs roughly $600 to $1,000. Prologis, IDI Logistics and Seefried Industrial Properties are among the active developers there.

That makes yard space more valuable here. A tenant that needs trailer storage should expect to pay for it, or to accept a building with fewer stalls than a comparable Dallas site would offer. Comparing industrial space by the numbers across the two markets shows the gap quickly.

Clear height, dock ratio and yard space as the specs that move with demand

Three physical specs carry most of the negotiation: clear height, dock ratio and yard space. Each one is a number you can verify on a site visit.

Clear height is the usable vertical distance from the floor to the lowest obstruction. Older stock sits at 24 to 30 feet.

Dock ratio is the number of dock positions per 10,000 square feet, or per 1,000 pallets, depending on who is counting. A higher ratio means faster trailer turnover and less dwell time on the yard.

Yard space is the trailer parking and maneuvering area. It is often left out of a listing sheet, so measure it on the site visit.

When demand is strong, landlords hold firm on these specs and tenants accept older buildings with lower clear height. When demand cools, the same tenants push for dock upgrades and additional stalls as a condition of signing.

The terms themselves have settled meanings in US law, which matters when a dispute arises over what a landlord promised to deliver. The Wex definitions of lease and tenant improvement terms are a reasonable starting point for the vocabulary.

Building systems that support these specs, from fire protection to racking loads, are also governed by codes and standards. Federal infrastructure research programs cover some of that ground; see NIST infrastructure research for the technical side.

Rent escalations, TI allowances and term length in each region

Industrial lease escalation structures are similar in form across the three markets and different in size. Most leases use fixed annual bumps, often in the low single digits as a percentage.

Fixed bumps in recent leases have typically run 3 to 4 percent a year in all three markets. A 3.5 percent bump on a $9.00 rent adds about $0.32 per square foot in the second year.

A fixed escalation is predictable for both sides. An index-linked escalation ties the bump to a published measure of inflation. Tenants usually prefer fixed, because it caps exposure.

TI allowance is the landlord's contribution to tenant improvements, expressed as dollars per square foot. It is the main lever a tenant has when the face rent will not move.

Typical TI allowances on existing space run about $5 to $15 per square foot in the Inland Empire and Atlanta, on a five to seven year term. Dallas runs about $4 to $12 per square foot. Build-to-suit allowances are negotiated against the term and the scope.

These are typical ranges from published market reports, not quotes on a specific building. Clear height, dock ratio, yard space, term length and tenant credit all move the numbers.

Submarket vacancy data is published quarterly by brokerages such as CBRE, JLL, Cushman & Wakefield and Lee & Associates. Landlord quarterly reports from Prologis and Rexford Industrial carry occupancy and leasing spreads for their own portfolios.

Term length interacts with both. A longer term usually buys a larger TI allowance and a lower escalation rate, because the landlord amortizes the concession over more years.

Here is a worked example of how the same requirement prices out differently. Suppose a tenant needs 200,000 square feet with 36-foot clear height, 30 dock doors and 60 trailer stalls.

In all three, the tenant should model total occupancy cost, not face rent. Rent plus escalation plus amortized TI plus drayage or linehaul equals the real number.

Public filings are a useful check on landlord behavior in these markets. REITs and commercial real estate companies disclose lease obligations and occupancy in their annual reports, searchable through SEC filing search.

The disclosure rules behind those filings are set out in Regulation S-K, which covers how real estate companies report lease obligations and related matters.

How to compare the same distribution requirement across all three

Run one requirement through all three markets before you negotiate anywhere. The comparison only works if the requirement is identical on paper.

Two more steps make the comparison honest. First, adjust for what each market forces you to give up. Second, get the numbers from someone who will show the work. A best industrial space services 2027 provider is only as good as the drayage and labor math it can reproduce from public data, lane by lane and wage by wage.

The broader discipline is treating location selection as research rather than as a tour schedule. The market that wins on rent is often not the market that wins on total cost.

Common questions