Reviewed by Robert Mendieta Jr., CCIM — Associate Broker · Commercial Division · DRE #01422904
Last updated: October 4, 2026 · Market figures are attributed to their publisher and period in the text.
Warehouse site selection usually starts as a rent comparison, and that is how occupiers end up in the wrong building. The cheapest rate per square foot can become the most expensive lease once you count the space you actually need, the trucks, the workers and the power. Whether you are choosing a warehouse location for a first lease, an expansion or a purchase, here are the eight factors that decide total cost, a sizing method and what current Inland Empire data shows.
The direct answerWhat Is Warehouse Site Selection?
Warehouse site selection is the process of choosing the market, submarket and specific building that give your operation the lowest total cost to serve customers. It weighs location relative to ports and customers, truck access, labor, building specs such as clear height and docks, power, zoning and total occupancy cost, not just the asking rent.
The same holds for distribution center site selection or logistics site selection.
National trend · CoStar, Industrial Bulk Distribution National Report, September 2026
In U.S. bulk distribution buildings (over 200,000 SF), most absorption gains have been concentrated in newer buildings with clear heights of over 36 feet, while older buildings have seen net move-outs since 2023. The average median time to lease big-box space rose to over 10 months as of Q2 2026, from 6.8 months in 2023.
Key Takeaways
- Compare total occupancy cost, not the rate. In our hypothetical, a building about 9.5% cheaper per SF costs $31,680 more a year.
- Clear height sets your square footage: one rack level is worth 4,800 SF in that example.
- Location cuts both ways: CoStar’s market asking rent is $1.06/SF/month in the Airport Area submarket vs. $0.86 in Moreno Valley/Perris, while vacancy is 9.6% in Moreno Valley/Perris vs. 8.2% in the Airport Area (Apex’s analysis of CoStar data, Q3 2026).
- Occupiers hold leverage: free rent is common on new, larger 5-year-plus leases, and the triple-net asking average for available space sits about 25% below its 2023 peak (CoStar, Q3 2026).
- California rules apply to new or expanded logistics uses that meet the law’s criteria from January 1, 2026, and AB 98 added a truck routing plan requirement.
Why Isn’t Price per Square Foot the Whole Story?
Because you pay the rate times the square footage you actually need, plus NNN charges, minus concessions. A lower rate on a lower-clear building can cost more, because it takes more floor to hold the same inventory.
| Hypothetical building | Rate (SF/month) | Rack levels | SF needed | Base rent / month | Base rent / year |
|---|---|---|---|---|---|
| Building A (taller clear) | $1.05 | 5 | 19,200 | $20,160 | $241,920 |
| Building B (lower clear) | $0.95 | 4 | 24,000 | $22,800 | $273,600 |
Building B is about 9.5% cheaper per square foot yet costs $2,640 more per month, or $31,680 a year, before NNN charges. The rates are not quotes, but they sit near the Inland Empire industrial market asking rent of $1.03 per SF per month (Apex’s analysis of CoStar data, Q3 2026). For rent levels, see what warehouse space costs in the Inland Empire.
Per CoStar’s Q3 2026 report, flex space asks roughly 60% more per SF than logistics space, and sublease trades more than 20% below direct space. The triple-net asking average for available space is about 25% below its 2023 peak, and with concessions, brokers cited by CoStar say effective rents are up to 40% lower, depending on location, size and vintage.
Under a triple net (NNN) lease, taxes, insurance and CAM charges ride on top of base rent, so every extra square foot adds to them too.
The eight factorsWhat Factors Should You Consider When Choosing a Warehouse Location?
Eight factors decide whether a site works. These are the factors to consider when choosing a warehouse location, and price per square foot is only part of one.
| Factor | What to check | Data point |
|---|---|---|
| 1. Ports, rail, customers | Distance to freight and customers | Rents higher near ports (CoStar) |
| 2. Freeway access | Interstate minutes, truck routes | Population centers along I-15, I-10 (CoStar) |
| 3. Labor | Labor shed, wages | Mean mover wage $22.19/hr vs. $20.32 U.S. (BLS) |
| 4. Clear height, docks | Clear height, doors, truck court | Median 18 ft in IE sales (CoStar) |
| 5. Power | Service capacity, upgrade timing | High-power facilities hard to replicate near ports (CoStar) |
| 6. Zoning | Permitted use, state rules | State standards from January 1, 2026 |
| 7. Total occupancy cost | Rate × SF, NNN, concessions | Free rent common on new, larger 5-year-plus leases (CoStar) |
| 8. Growth room, leverage | Availability in your size band | Under 7% available below 50,000 SF (CoStar) |
1. Location relative to ports, rail and customers
If containers arrive through the ports of Los Angeles and Long Beach, every mile inland adds drayage, the short-haul trucking from port or rail yard to your dock. CoStar notes Inland Empire rents are higher closer to the ports. The Port of Los Angeles handled 10,239,318 TEUs in 2025, and its 2026 total through August was up 1.51%. Then map your customers.
2. Freeway access and truck routing
CoStar notes the Inland Empire’s largest population centers are concentrated in its southwestern portion along Interstate 15, running northeast toward Las Vegas, and Interstate 10, running east across the southern United States. Time the drive from each site to the on-ramps your trucks will actually use, and check the local truck route map too: AB 98 ties a new logistics facility’s routing to the state highway system.
3. Labor availability and wages
The Inland Empire’s labor force is 2,234,674 (Oxford Economics via CoStar, Q3 2026), and transportation and warehousing employment tops 200,000 workers. BLS puts the May 2025 mean wage for hand laborers and freight, stock and material movers in the Riverside-San Bernardino-Ontario metro at $22.19 an hour versus $20.32 nationally. Check the labor shed, the commuting area a site actually draws from, before you sign.
4. Clear height, docks and truck court
Clear height, the usable height under the lowest obstruction, sets how many pallet levels you can rack, and so how much floor you need. In the Inland Empire, industrial buildings sold in the past 12 months had ceilings of up to 42 feet, but the median was 18 feet (CoStar, Q3 2026), and CoStar reports large-scale, modern logistics facilities continue to outperform. Count dock-high doors against peak truck volume. Mostly trailers and yard? See industrial outdoor storage (IOS) instead.
5. Power and utilities
Confirm electrical service before you plan automation, charging or refrigeration. NAIOP research expects new equipment, fiber-optic networks and electric vehicle charging stations to consume significant amounts of power. CoStar notes that modern facilities with high clear heights and significant power capacity are difficult to replicate closer to the ports because of land constraints. Get upgrade timelines in writing.
6. Zoning, entitlements and neighbors
Permitted use is a yes-or-no test: if zoning does not allow your operation, rent does not matter. Resistance is rising; CoStar reports Beaumont, Moreno Valley and Fontana have rejected some recent industrial proposals, a rarity in the past. Many new or expanded logistics buildings face state rules too; see the California section below.
7. Total occupancy cost and lease terms
Total occupancy cost is base rent times the square footage you need, plus NNN charges, less concessions, over the full term. Renewal risk belongs in the math: CoStar notes longer-term Inland Empire tenants still face rent hikes at lease expiration; market asking rents are still up about 20% from five years ago and have nearly doubled over the past decade. Negotiate extension options up front.
8. Growth room and market leverage
CoStar’s Q3 2026 data shows availability at 18% in 250,000–500,000 SF buildings but under 7% in buildings smaller than 50,000 SF. Market-wide availability is 12.5%, a 15-year high, and leverage remains with occupiers. That window may narrow: CoStar says the construction pipeline has thinned substantially, with 14.0 million SF underway, just 1.8% of inventory, down from a 2022 high of 45.7 million SF. See how that availability breaks down by Inland Empire submarket in our warehouse availability guide.
Sizing the spaceHow Much Warehouse Space Do I Need?
Start from peak inventory in pallet positions, divide by the rack levels your clear height allows, then add aisles, docks, office and a growth buffer. Below is a manual warehouse space calculation for a hypothetical distributor with 1,800 pallets at peak; replace every assumption with your own numbers. For how that usable figure compares with rentable square feet, see our guide to rentable vs. usable square feet.
Hypothetical worked example · Building A (5 rack levels) vs. Building B (4 rack levels)
- Pallet footprint. Assume 48 × 40-inch pallets: 1,920 square inches ÷ 144 = 13.33 SF each.
- Rack levels. Assume the taller Building A fits 5 load levels and the lower-clear Building B fits 4.
- Floor positions. 1,800 ÷ levels: A needs 360 positions; B needs 450.
- Pallet footprint area. Positions × 13.33 SF: A = 4,800 SF; B = 6,000 SF.
- Aisles and rack structure. Assume the rack zone is 2.5× the pallet footprint: A = 12,000 SF; B = 15,000 SF.
- Non-storage space. Assume storage is 75% of the building (the rest is staging, office and charging): A = 16,000 SF; B = 20,000 SF.
- Growth buffer. Assume +20% over the lease term: A = 19,200 SF; B = 24,000 SF.
One extra rack level is worth 4,800 SF of building here, which is why Building B lost the cost comparison above. Adjust for floor-stacked goods and cold zones, and size to peak season, not the average month.
For perspective, the median Inland Empire industrial building sold in the past 12 months was 16,648 SF (CoStar, Q3 2026). Once you have a size, the own vs. lease calculator helps you test the next decision.
Local evidenceHow Does the Inland Empire Compare for Industrial Site Selection?
The Inland Empire trades proximity for space. CoStar reports rents are higher in areas closer to the ports, particularly in West Inland Empire cities, while rents on the East side of the market are down more severely.
Apex’s analysis of CoStar data · Inland Empire Industrial · Q3 2026
- Market-wide: market asking rent $1.03 per SF per month, vacancy 8.7%, availability 12.5%, a 15-year high.
- Five largest submarkets by inventory: market asking rents from $0.86 to $1.08, vacancy from 6.2% to 10.5%. Of those five, the two lowest-rent submarkets carry the two highest vacancy rates.
CoStar reports construction remains concentrated in the Airport Area submarket, including Ontario, Rancho Cucamonga and Fontana, reflecting proximity to Los Angeles and rail access to the ports, while mid-sized deliveries have increasingly extended southeast into Norco, Corona and Perris. The case for industrial site selection here rests on abundant, relatively affordable land and industrial rents that remain below coastal Southern California levels, close to the region’s ports.
| CoStar submarket | Market asking rent ($/SF/month) | Vacancy |
|---|---|---|
| Airport Area | $1.06 | 8.2% |
| Moreno Valley/Perris | $0.86 | 9.6% |
| San Bernardino | $0.90 | 10.5% |
| Riverside | $1.07 | 7.5% |
| Chino/Chino Hills | $1.08 | 6.2% |
Moreno Valley/Perris offers the lowest market asking rent of CoStar’s 15 submarkets and a higher vacancy rate than the Airport Area, in exchange for a longer haul to the ports. For the broader picture, see the Inland Empire industrial market overview and our quarterly Inland Empire market reports.
RegulationWhat Zoning and Truck-Route Rules Affect a Warehouse Site in California?
Beginning January 1, 2026, California sets statewide design and build standards for proposed new or expanded logistics use developments that meet criteria specified in the law. AB 98, as enacted, also requires the operator to submit a truck routing plan for city or county approval before a certificate of occupancy.
The standards cover building design, parking, truck loading bays, landscaping buffers, entry gates and signage. AB 98 (Chapter 931) was approved in September 2024, and SB 415 (Chapter 316) amended it in October 2025, so older summaries may be out of date.
Legal note: Apex is not a law, tax or accounting firm. Confirm zoning, permitted use and warehouse rules with your attorney and the city before you sign.
How Do You Choose a Warehouse Location, Step by Step?
Define requirements, set the search area from customers, ports and labor, shortlist on specs, compare total cost, then negotiate while occupiers hold leverage. Here is how to choose a warehouse location in seven steps; the same sequence fits any warehouse location selection.
- Write the requirement. Square footage, clear height, docks, power, yard and office.
- Draw the search area around your customers, your inbound freight and your labor shed.
- Shortlist available space, not only vacant space. Availability includes sublease and under-construction space, so CoStar’s 12.5% availability runs ahead of 8.7% vacancy (Q3 2026).
- Tour and verify. Measure, count doors, confirm power.
- Compare total occupancy cost using the Building A versus B logic.
- Negotiate. Free rent, renewal options and flexible terms; CoStar reports one to several months of free rent is common on new, larger leases of 5 years or longer.
- Confirm zoning, permitted use and truck-route requirements before you sign.
For the lease steps that follow, see the full commercial leasing process. If you would rather own, read about buying your own warehouse with an SBA 504 loan. Apex’s tenant representation service runs this search for occupiers.
Common questionsWarehouse Site Selection: Frequently Asked Questions
What are the most important factors in warehouse site selection?
Location relative to ports and customers, freeway access, labor, building specs, power, zoning and total cost. Weigh them together: in the Inland Empire, CoStar reports rents are higher closer to the ports, so the cheapest rate often comes with a longer truck haul.
How much warehouse space do I need for my business?
Convert peak inventory to pallet positions, divide by your rack levels, then add aisles, non-storage space and growth. In our hypothetical, 1,800 pallets need about 19,200 SF in a building that fits five rack levels, but about 24,000 SF in one that fits only four.
What clear height do I need in a warehouse?
It depends on how many rack levels your inventory can use. Nationally, CoStar reports most absorption gains in bulk distribution buildings have been concentrated in newer buildings with clear heights of over 36 feet, while the median Inland Empire industrial building sold in the past 12 months had 18-foot ceilings. More clear height means more rack levels and less floor to lease.
Is warehouse space cheaper farther from the ports?
Generally yes, on asking rent. CoStar reports Inland Empire rents are higher closer to the ports; in Q3 2026 its market asking rent was $1.06 per square foot per month in the Airport Area submarket versus $0.86 in Moreno Valley/Perris. Longer truck hauls can offset part of that saving.
Is sublease warehouse space a good deal?
It can be. CoStar reports sublease space makes up 19% of Inland Empire availability and trades at a discount of more than 20% to directly listed space. The trade-off: you inherit the remaining term and the original lease, so read it first.
What does California’s AB 98 mean for warehouse tenants?
Beginning January 1, 2026, state law sets design and build standards for proposed new or expanded logistics use developments that meet criteria specified in the law, and AB 98, as enacted, requires a facility operator to submit a truck routing plan before a certificate of occupancy is issued. SB 415 amended these rules in 2025. Apex is not a law, tax or accounting firm, so confirm current requirements with your attorney.
Should I lease or buy my warehouse?
It depends on how long you will stay, how much capital you want tied up and how much control you need. Leasing keeps capital free; owning builds equity and control. Run your numbers through our own vs. lease calculator and read our guide to buying a warehouse with an SBA 504 loan.
Get a site shortlist built on total cost
Tell us your pallets, trucks and headcount. Robert Mendieta Jr., CCIM — Associate Broker · Commercial Division, DRE #01422904 — provides site selection and shortlist analysis for occupiers and buyers, comparing every option on total cost, not the asking rate.
Call Robert: (951) 977-3251Or request a free CRE consult with the form below.
Sources
- CoStar Group · Industrial Market Report, Inland Empire – CA USA · Q3 2026, dated September 30, 2026.
- CoStar Group · Industrial Bulk Distribution National Report, United States · dated September 18, 2026.
- U.S. Bureau of Labor Statistics · Occupational Employment and Wage Statistics, Riverside-San Bernardino-Ontario MSA · May 2025.
- Port of Los Angeles · Container Statistics · through August 2026.
- California Legislature · AB 98 (Ch. 931, 2024) and SB 415 (Ch. 316, 2025).
- NAIOP Research Foundation (now the CREDA Research Foundation) · The Evolution of the Warehouse · October 2020.
Building A and B figures are hypothetical, not market data. Nothing here is legal, tax or investment advice.
Robert Mendieta Jr., CCIM · Associate Broker · Commercial Division · DRE #01422904 · Apex Real Estate Services · 3750 E. Florida Ave Suite A, Hemet, CA 92544 · (951) 977-3251 · robert@apex-res.com. Last updated: October 4, 2026.