Industrial Market
The Inland Empire industrial market exploded in 2000. Almost as fast as product was built, steadfast demand snapped it up off the market. Record-breaking activity catapulted sales and leasing volume to 36.5 million square feet, a 32% increase from the 1999 total.
Continued strong demand in the Inland Empire industrial market saw vacancy rates decline for the 11th consecutive quarter, dropping to 2.9%. For the quarter, the industrial vacancy rate declined 19% from 3.51% in the third quarter.
At 41 cents per square foot per month, the fourth quarter average asking gross lease rate remained unchanged for the fourth consecutive quarter. Average asking manufacturing and warehouse gross lease rates ranged from a low of 29 cents to a high of 47 cents in the quarter; on par with third-quarter numbers.
Every quarter for the past two years, construction activity has remained above 10 million square feet. Fourth-quarter activity increased 5% from the third quarter, to 11.9 million square feet. For the year, the Inland Empire industrial market delivered more than 6 million square feet of completed construction.
Office Market
The fourth quarter saw a relaxing office market. After three quarters of continuous, positive net absorption to begin the year, the Inland Empire calmed to a positive 61,750 square feet in the final period. Stimulated by strong activity in Riverside, Ontario and Colton, the market as a whole experienced approximately 547,000 square feet of positive net absorption for the entire year.
Vacancy rates continued to decline in the fourth quarter, but lease rates flattened.
The Inland Empire office vacancy rate decreased to 16.53%, the lowest rate in more than six years and a 2.4% drop from the third quarter. The vacancy rate has fallen continuously over the past 10 quarters, from 25.05% in the second quarter of 1998 to its present low.
The fourth-quarter average asking lease rate for office space remained stable at $1.37 per square foot per month. The average asking lease rate appreciated approximately 2.2% from the fourth quarter of 1999.
The Inland Empire office market had six buildings under construction in the fourth quarter. Approximately 363,680 square feet was under construction, up 42.3% from the 255,514 square feet under construction in the third quarter, and up more than five-fold from the 70,021 square feet under construction in the fourth quarter of 1999.
