Asian 3PLs To Drive Activity To SoCal Industrial Market Despite Tariffs

Third-party logistics providers based in Asia increased their presence in the U.S. throughout 2024 in line with consumer behavior and in anticipation of tariffs promised throughout the presidential campaign by President Donald Trump.

Now that the tariffs have been announced, including 10% on goods from China, 3PL providers are expected to accelerate their pace of leasing in U.S. industrial real estate. The tariffs mean costs will go up, but the desire among consumers for fast delivery and a broad selection isn’t going anywhere, sustaining the need for 3PL space.

“In order for those sellers to penetrate the U.S. market and continue to keep their market share and grow their market share, they’ve got to put inventory in the U.S.,” said Curtis Spencer, CEO of IMS Worldwide, Inc. “That reality that started last year, some of these shippers and sellers said we’ve got to establish with 3PLs that we know, that we’re familiar with.”

Coastal markets remain the most likely target for 3PL providers, Spencer said. These companies specialize in storage, order processing, shipping and other key functions for fast e-commerce service.

This activity is expected to boost the industrial market that has sagged in the last year due to a supply glut.

3PLs signed 66 leases of 100K SF or larger in the Inland Empire in 2024, according to new data from CBRE. Of those, 42.4% were signed by Asian 3PLs, making the market adjacent to the busy ports of Los Angeles and Long Beach the most popular among these providers. Philadelphia, northern and central New Jersey and Los Angeles County trailed the Inland Empire.

“Asian 3PL providers likely will account for a solid share of overall 3PL leasing activity in 2025 even in the face of increased tariffs on certain foreign imports,” the CBRE report’s authors wrote. 

Of 428 new leases of 100K SF or more signed by 3PL companies in the U.S. in 2024, 18%, or 78 leases, were by Asian-based providers. These companies were largely looking to be close to seaports — more than 80% of their lease signings were for properties within 100 miles of one. 

Changes made under the Biden administration and expanded by Trump to a policy known as the de minimis rule are among the elements possibly influencing shippers and expanding the need for 3PLs. 

The de minimis rule is an exemption on duties and taxes on goods entering the country valued under $800 per person, per day. The way the de minimus rule had been implemented meant that goods ordered from overseas retailers were usually sent by air freight, but the removal of that exemption for packages from China has pushed more goods through seaports and into warehouses. 

It follows that major industrial markets with proximity to a port and within a day or two drive of significant population centers, like the Inland Empire, would be the focus of shippers, JLL Managing Director Mac Hewett said. 

All of the global website marketplaces are going to now have to use 3PLs in the United States, especially in and around coastal areas that are close to ports, so that they can get goods quickly into the local mail system and into the hands of shoppers, Spencer said.  

This all amounts to a potential boon for port-close industrial space, as Spencer sees it.

“This is going to be the short-term saving grace for the mildly overbuilt industrial market in SoCal,” Spencer said. 

There is space to be had in the Inland Empire, a market that has risen in tandem with e-commerce. The IE’s Q4 2024 vacancy rate was 7.1%, according to CBRE, a far cry from just a few years ago when vacancy was nearly nonexistent. 

Other industrial real estate watchers see the rise of 3PLs not so much as a reaction to the de minimus rule as a response to the successful growth of global e-commerce retailers, especially those based in Asia, and those companies investing in infrastructure to expand their market share in the U.S.  

The driving force behind their demand is that overseas retailers want and need to be able to deliver goods quickly to eager American shoppers. 

“If you look globally, the biggest opportunity for a customer base is the U.S.,” JLL’s Hewett said. “Who's going to be the biggest buyer of all the stuff that China is manufacturing? It's the United States.”

Shopping sites based outside the U.S., such as Shein, have been working to expand stateside since at least early last year. At that time, The Wall Street Journal reported that Shein and TikTok were setting up shop in Seattle, trying to poach Amazon executives to help them build out their logistics networks and warehouse footprint stateside with the aim of taking on the online shopping giant. 

Earlier this year, Shein took 1M SF of distribution center space off the sublease market. And while its motives for doing so are not explicitly known, it seems safe to assume that it no longer wishes to lease the space out because it plans to use it.  

The 3PLs that serve these retailers haven’t slowed, Hewett said. 

“They're still taking space. They're still leasing space. They're still out touring right now. They're still making offers,” he said. 

The loosening in the market has made space for 3PLs to get in, Newmark Senior Managing Directors Josh Hayes and David Noblitt said. When space in the IE was at a premium and landlords could be picky, these 3PLs were often losing out to bigger name tenants. 

“Now that there's a lot of space on the market, they've had an opportunity to come in and fill the gaps, and they've been a source of a lot of activity,” Hayes said. 

This has played out nationally as well: 21% of the space Asian 3PLs signed on for was sublease space. Among non-Asian 3PLs, sublease space accounted for just 12% of what they leased, according to CBRE. 

Hayes and Noblitt don’t see any one main driver for these groups getting more active, but they pointed to a number of factors, including the drought in the Panama Canal and the anticipation of tariffs. 

“It’s a perfect storm,” Noblitt said. 

That storm is translating to more deals getting done. 

3PLs have fueled the velocity that Hayes and Noblitt are seeing in the Inland Empire. Their 10-year average deal volume in the size these occupiers look for is 31 deals. Last year, they did 63 in the same size range. 

“We’re happy they’re here, they’re keeping the market somewhat robust,” Hayes said.