Thirty days to put your building in a foreign-trade zone. Your lease is what stops you.
Duty is deferred in a zone, eliminated on anything re-exported, and the merchandise processing fee falls to one entry a week. The Foreign-Trade Zones Board approves a site in thirty days. What it reads first is the lease.
Thirty days to put your building in a foreign-trade zone. Your lease is what stops you.
The weekly-entry saving alone runs about $0.90 per square foot a year on a 150,000 square foot building, close to what five months of free rent is worth over a five-year term. The federal application turns on one sentence, and it is a sentence your lease almost certainly does not contain.
Landed cost has been repriced three times in fourteen months. The Supreme Court struck down the IEEPA tariffs on February 20. The 10% Section 122 stopgap expired July 24 and was replaced the same day by Section 301 forced-labor tariffs covering 60 economies, roughly 10% for the EU, Taiwan, Mexico, Canada and India, 12.5% for Japan, Korea, Vietnam, Thailand and Brazil, and about 37.5% all-in for China. Section 232 metals sit at 50%. The Penn Wharton Budget Model puts the average effective rate across all US imports at 6.7% as of July, nearly triple the 2.3% of January 2025, with $107 billion in IEEPA refunds certified through August. A tenant signing a five-year Inland Empire lease this quarter is committing to a building for a tariff regime nobody can describe yet.
A foreign-trade zone is the standing hedge against that, and it attaches to the building rather than to the company. Goods admitted to a zone sit outside the customs territory of the United States until they enter US commerce. Duty is deferred until withdrawal, never accrues at all on anything re-exported or destroyed, and the importer files one weekly customs entry in place of one entry per shipment. Under the Alternative Site Framework, a usage-driven site inside an approved service area is approved by the Foreign-Trade Zones Board within thirty days on a short application. Riverside County holds its own grant, FTZ 244. San Bernardino County is served through FTZ 50, the Long Beach grantee, which operates Subzone 4 in San Bernardino. Across most of this market the zone is not the constraint.
The constraint is in the paperwork. 15 CFR 400.21(d)(3)(i) requires the application to include a statement as to site ownership (if not owned by the applicant or proposed operator, evidence as to their legal right to use the site). For a tenant, that evidence is the lease. Activation with Customs then runs under 19 CFR 146.6, which requires a blueprint showing the buildings and every opening, a written procedures manual for the inventory control and recordkeeping system, the written concurrence of the grantee, and a Form 301 operator’s bond, after which the port director weighs the security, suitability, and fitness of the facility. Every one of those items describes the landlord’s building.
Now read your own lease against that list. The standard Inland Empire form permits warehousing and distribution of the tenant’s products, which is not the same thing as operating a customs zone on the landlord’s land, and a narrow use clause is thin evidence of a legal right to use the site for zone purposes. The fencing, segregation, access control and camera coverage that satisfy a port director are alterations, and they need a consent the landlord is free to withhold, to price, or simply never to answer. Nothing in a standard lease obliges a landlord to sign a consent, produce a site plan, or return a grantee’s call. A tenant three years into a seven-year term has no leverage to make any of it happen, and the landlord has no reason to help for free at the exact moment the tenant has disclosed that the zone is worth money.
In zone → 52 entries × $651.50 = $33,878
Saving = $135,512/yr = $0.90/SF/yr on 150,000 SF
The weekly-entry saving is the part that does not depend on what you import. The merchandise processing fee is 0.3464% of entered value, with a $651.50 cap per entry for the fiscal year ending September 30, so any entry above roughly $188,000 in value pays the cap. An importer filing one entry each business day pays that cap 260 times a year. Inside a zone it files 52 times.
Set that against what this market is actually paying for concessions. Across 260 Inland Empire industrial lease comps in our own file with an off-market date in 2025 or 2026, the median free rent concession is five months and the median deal is 138,442 square feet. Five months free on a sixty-month term at the $1.03 market asking rent is worth $1.03 per square foot a year. The weekly-entry saving is 88% of that. It costs none of the negotiating capital that free rent costs, it is invisible to the landlord’s rent comparison, and it does not stop in month six.
Then read the surrender clause, because the zone build-out is the part nobody prices. The tenant pays for the fencing, the segregation and the inventory control system. At expiration a standard restoration clause either makes the tenant strip it out at its own cost, or leaves it in place, at which point the landlord owns a building that is materially easier to lease to the next importer. Neither outcome was negotiated. Both were settled by language written before anyone at that table was thinking about customs.
Ask at the lease event, where it costs nothing. One sentence does most of the work: Landlord shall reasonably cooperate, at no cost to Landlord, with Tenant’s application for foreign-trade zone designation and activation of the Premises, including executing such consents, site plans and grantee acknowledgements as the Foreign-Trade Zones Board or U.S. Customs and Border Protection reasonably requires. Pair it with a use clause broad enough to name zone operations, an alterations carve-out for the security and segregation work Customs requires, and a surrender provision that states plainly whether the improvements stay and who pays if they go. Before you ask for any of it, call the grantee and confirm the building sits inside an approved service area. That call takes five minutes and decides whether the clause is worth anything at all. If you are already mid-term, raise it at the next amendment, expansion or extension, because those are the moments a landlord wants something from you.
150,000 SF Inland Empire distribution building
Assumptions, not survey figures: an importer filing one customs entry each business day on roughly $49 million of annual entered value, enough for every entry to reach the fee cap. FY2026 merchandise processing fee of 0.3464% capped at $651.50 per entry, in effect through September 30. Market asking rent of $1.03/SF NNN from CoStar’s September 24 Inland Empire report. Free rent at the five-month median of our 2025–26 comp set. Duty savings are excluded here because they depend entirely on your mix. Your numbers will differ.
Duty deferral and re-export elimination sit on top of this and are usually the larger number. At a 10% blended rate on $49 million of imports, re-exporting a tenth of the volume removes about $490,000 a year of duty that is otherwise paid and never recovered.
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One email a week. Unsubscribe anytime.Each issue costs out one thing Inland Empire industrial tenants are absorbing, with the arithmetic shown. No listings, no market cheerleading.
I read industrial leases across San Bernardino and Riverside Counties. Send me your use clause, your alterations clause and the building address, and I will tell you whether the building sits in an approved service area and whether your lease gets you through the application.
Information is from sources deemed reliable but is not guaranteed. Nothing here is investment, tax, or legal advice.
