Skechers Signs $98M Distribution Lease

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RANCHO BELAGO, CA-Shoe manufacturer and marketer Skechers USA has signed an 11-year, $97.5 million lease for a 1.8-million-sf build-to-suit distribution center in this Inland Empire community in what CB Richard Ellis describes as likely the largest industrial lease of its kind ever signed. “We believe this is the largest industrial lease by a single tenant under one roof ever in the US,” says Darla Longo, who was part of a CBRE team including Jeff Morgan and Bart Reinhard that represented both Skechers and Moreno Valley-based landlord Highland Fairview.

Neither Skechers nor CBRE released the value of the deal in their announcements on the lease, but a public filing by publicly held Skechers says that the company will pay $679,540 per month for the first five years of the 11-year deal and $788,267 per month for the remaining six years. The agreement includes options for Skechers to renew for up to 14 years beyond the original 11-year lease.

The new Skechers facility, which is now in the entitlement process, will be constructed at the northwest corner of Theodore Avenue and Eucalyptus in Rancho Belago, which is under the jurisdiction of the City of Moreno Valley. The lease takes effect upon the expected completion of the project in January 2009.

Paul Galliher, SVP of distribution at Skechers, says that the new building will allow the company to centralize its operations from its existing five buildings in Ontario. He adds that the building will be highly automated, allowing the company to receive, store, retrieve, pack and ship product through a high-tech material handling system.

Skechers needs the new space because of continuing sales growth that has boosted its distribution needs. Galliher points out that the company’s annual sales have grown from $920 million in 2004 to $1.2 billion at the close of 2006.