Industrial Market
The Inland Empire’s industrial vacancy rate fell to 1.6% in the second quarter, down 18.4% from the past quarter.
The Inland Empire east submarket saw its vacancy rate fall 55% to 1.29%, with the west rising to 1.7% in the period.
The west region continued to see the highest vacancy rate for buildings 10,000 to 19,999 square feet, at 5.1%.
There was about 6.1 million square feet of gross activity during the second quarter in the industrial sector.
Solid demand for space resulted in 4.2 million square feet of positive net absorption for the quarter. There’s been more than 7.1 million square feet of net absorption in the sector this year.
The average net lease rate for industrial space fell to 37 cents per square foot in the second quarter. Lease rates ranged from a low of 35 cents to a high of 47 cents in the period.
Industrial buildings larger than 100,000 square feet reported an average net lease rate of 35 cents per square foot in the quarter. Inland Empire east led the region with an average net lease rate of 40 cents per square foot.
The Inland Empire had 29 buildings for a total of 3.2 million square feet complete construction during the second quarter. There are 207 projects totaling 16.1 million square feet in the construction phase.
Two large buildings in the west finished construction in the second quarter: the 490,000-square-foot Chino South Business Park and a 765,456-square-foot building at Wineville Center Pointe in Mira Loma.
In the east, a 686,400-square-foot building was finished at Eastgate Business Center in Moreno Valley.
Office Market
The Inland Empire office market posted positive net absorption in the second quarter. The overall vacancy rate fell 11% to 10.3% from the prior quarter.
For the fourth quarter in a row, class A office space reported the highest vacancy rate in the Inland Empire at 13.3%. Class B vacancy was 8.5%.
There was 306,292 square feet of positive net absorption in the second quarter. The west region led net absorption with 159,264 square feet.
Inland Empire’s average asking lease rate fell 2% to $1.74 per square foot in the second quarter, versus the prior quarter. Rates were higher in the west at $1.86 per square foot, compared to $1.71 in the east.
Corona led the region with an average lease rate of $2.30 per square foot, with Ontario second at $1.96 per square foot.
The Inland Empire saw construction finish on three office buildings in the second quarter: the 84,000-square-foot building at Three Carnegie Plaza and a couple of smaller class B buildings in San Bernardino.
There is 943,063 square feet of office space under construction.
Analysis by CB Richard Ellis Group Inc.’s Global Research and Consulting.
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