On the land north of State Route 126, between The Old Road and Commerce Center Drive and just east of the Chiquita Canyon Landfill, Five Point has county approval to add 3.4 million square feet to the Valencia Commerce Center. The L.A. County Board of Supervisors signed off in November after a hearing where nearly 60 residents spoke, 47 of them in favor. Alex Herrell, Five Point’s director of community development, told supervisors the expansion is expected to create 10,000 jobs, The Signal reported. Local resident Kaitlyn Luna had a blunter take on that much warehouse and industrial space. She called it “crazy.”
Much of the debate that day turned on homes, traffic and fire risk. Business owners face a narrower question. A company outgrowing a garage in Saugus or a cramped unit off Rye Canyon Road will soon have more industrial space to choose from close to home. Whether that space is the right place for its inventory depends less on the valley and more on where its customers live.
A Bigger Industrial Base and Softer Rents
The Santa Clarita Valley already holds nearly 30 million square feet of industrial and commercial space, and about 8 million more is approved for future development, according to the Santa Clarita Valley Economic Development Corp. The Valencia Commerce Center alone covers 1,200 acres in the northwest quadrant of Interstate 5 and Route 126, with 9 million square feet built and 12 million planned at build-out. That supply arrives while tenants hold more bargaining power than they did a few years ago. Across the Los Angeles industrial market, asking rents fell 7% year over year in the second quarter and 32.4% over the past 36 months, according to CBRE’s quarterly figures.
Cheaper rent still comes attached to a lease. Industrial tenants typically commit for several years and pay their share of property taxes, insurance and maintenance on a triple-net basis. They buy their own racking and hire the people who pick and pack. For a company with steady regional sales, that commitment can pay for itself. For one still testing demand in other parts of the country, it ties up cash in a single location.
Where the Orders Go Decides the Building
A Valencia address works well for buyers in Los Angeles, Ventura and Kern counties. Trucks leaving the valley can reach most of Southern California the same day. The picture changes once a real share of orders ships to New York, New Jersey or New England, because every one of those parcels leaves Santa Clarita and crosses the country. The buyer waits longer. The seller pays for the distance on each label.
Amazon sellers deal with an added step. Since Jan. 1, Amazon no longer preps or labels Fulfillment by Amazon inventory in the U.S., so each unit has to arrive ready for the shelf. A seller supplying East Coast fulfillment centers from a Valencia unit has to do that work locally and then pay to move finished cartons across the country. Holding part of the inventory in the East puts the prep work closer to where the goods are headed.
Renting Space on the Other Coast Without a Lease
This is the gap outsourced warehousing fills. Owners who start out searching for a warehouse for rent in Edison, New Jersey, can hold East Coast stock without signing for a building or hiring a crew of their own. At Ardi Express, inventory sits in WMS-tracked storage at 2 Corporation Row in Middlesex County, within 65 miles of five Amazon fulfillment centers, and ships to buyers who order through Shopify, Amazon, Walmart Marketplace, Etsy and other channels. The Edison site also handles FBA prep, including FNSKU labeling and poly-bagging, and the company compensates clients at full invoice value, up to $100,000, for goods lost or damaged in that warehouse.
The two locations can work together. A valley company can keep its fast movers for West Coast buyers in a smaller Valencia space and send a portion of the line east. That cuts the square footage it needs to lease at home, a saving that can outweigh a few cents of difference in rent per square foot.
Questions to Settle Before Signing Anything
Start with the full monthly cost of a local lease, not the asking rent. Add triple-net charges, utilities, racking, a forklift and the wages of whoever will pack orders. Then divide the total by the number of pallets the space will realistically hold. That figure gives you something honest to compare against storage priced by the pallet.
Next, ask any warehouse, local or across the country, what it pays when inventory is lost or damaged, and get the cap in writing. Ask how quickly it receives and shelves a new shipment and how you will see stock counts between visits. Then test before committing. Moving one product line east for a single quarter shows what a second location does to delivery times and shipping costs, at far less risk than a long lease in Valencia.
The new buildings west of I-5 will give plenty of Santa Clarita companies room to grow, and many of them should stay right here. For the ones whose customers are spread across the country, the most useful square footage may sit closest to the people placing the orders.
