While the U.S. economy was downshifting, goods kept pouring in at near-record levels.
Imports to U.S. container ports that process retail goods from China and other countries jumped more than 26% in the first half of 2022 from pre-pandemic levels, according to Descartes Datamyne. Christmas shipments and the reopening of major Chinese factory hubs could goose volumes further.
Meanwhile, cargo keeps flooding in to the busiest U.S. seaport complex at Los Angeles/Long Beach. During the first half of this year, dockworkers there handled about 550,000 more 40-foot containers than before the pandemic started, according to port data.
Christmas toys and winter holiday decor landed on those docks in July, along with some patio furniture for Walmart and stretch pants, jeans and shoes for Target, said Steve Ferreira, CEO of Ocean Audit, which scrutinizes marine shipping invoices.
Retailers ordered most of those goods months ago and many are destined for the Inland Empire's already jam-packed warehouses.
"It's a domino effect. Now the inventory is going to really build up," said Scott Weiss, a vice president at Performance Team, a Maersk (MAERSKb.CO) company with 22 warehouses in greater Los Angeles.
Demand for space in the Inland Empire is so intense that when 100,000 to 200,000 square feet of space frees up, it "gets gobbled up in a second," said Weiss.
SEARS AND PARKING LOTS
Investors have almost 40 million square feet under construction in the Inland Empire - including Amazon.com Inc's (AMZN.O) biggest-ever warehouse - and at least 38% is spoken for, said Dain Fedora, vice president of research for Southern California at Newmark, a commercial real estate advisory firm.
While Amazon's 4.1 million square-foot facility rises on former dairy land in the city of Ontario, the online retailer has been shelving construction plans in other parts of the country.
Amazon is the biggest warehouse tenant in the Inland Empire and the nation. Its decision to scale back on building, coupled with rising interest rates and the slowing economy, is sidelining other would-be Inland Empire warehouse builders, area real estate brokers and economists told Reuters.
Meanwhile, the scramble for space continues.
Trucking company yards and spare lots around the region have already been converted to makeshift container storage, so entrepreneurs are marketing vacant stores as last-resort warehouses in waiting.
Brad Wright is CEO of Chunker, which bills itself as an AirBNB for warehouses, and works with everyone from state officials to the owners of vacated big-box stores to find new places to stash goods.
During a recent tour at the former Sears anchor store in San Bernardino's Inland Center mall, Wright and a potential tenant strolled past collapsed ceiling tiles, sagging wall panels and idled escalators while working out how forklifts would navigate the abandoned space. Wright sees the empty stores as one answer to easing the log jams.
"There's a lot of them sitting around, and they're in good locations," he said.