The third quarter offered another indicator of growing strength in the industrial market in the Inland Empire, with overall market fundamentals boosted by an increase in activity and lowered availability and vacancy rates.
Gross activity for the entire market totaled 8.5 million square feet, an increase of 1.7 million square feet from the second quarter. The Inland Empire West contributed the majority of the activity—with 6.1 million square feet—and the rest was in the Inland Empire East submarket.
Net absorption remained positive, with 4.3 million square feet at the end of the quarter bringing the year-to-date total to 10.7 million square feet. Industries driving the activity included consumer and food products and e-commerce-related companies. Manufacturing and construction companies are starting to make a comeback, too.
Availability and vacancy rates continued their downward trends despite the increase in construction activity, which led to 3.4 million square feet of new space being delivered to the market during the quarter. About 1.1 million square feet was preleased, which helped keep the availability and vacancy rates down. The rate is projected to increase next year based on 12.3 million square feet currently under construction.
The overall average asking lease rate increased 1 cent, but that number could be misleading since many of the larger big-box buildings don’t advertise asking rates. Rents for spaces larger than 500,000 square feet have increased significantly due to the lack of supply and demand that is nearing prerecession levels.
The Inland Empire’s rent growth is on track with CBRE Econometric Advisors’ forecast of 8.7% this year.
Analysis provided by CBRE Research.
