Real Estate Watch: Inland Empire
Inland Empire Industrial Steams Ahead
Industrial
The Inland Empire had 24 buildings complete construction, totaling 1.6 million square feet in the third quarter.
Development of new industrial projects in the Inland Empire remained strong with 5.8 million square feet under construction. More than half of the space under construction is due to be finished by the end of the year.
The third quarter saw about 7.l million square feet of gross activity, up 46% from the prior year. This steady demand in the Inland Empire resulted in an additional 4.3 million square feet of positive net absorption for the quarter, bringing the year-to-date total to 13.7 million square feet.
Vacancy and availability rates continued to fall, down to 2.97% and 8.9%, respectively, at the end of the quarter. Inland Empire industrial lease rates fell one penny to an average asking net rate of 37 cents per square foot.
Office
The Inland Empire office market ended the third quarter with 457,269 square feet of positive net absorption. This performance brings the year-to-date total to 596,569 square feet of positive net absorption.
The Inland Empire east region posted 339,005 square feet of positive net absorption, while the west had 118,264 square feet of negative net absorption.
Although the nation is seeing vacancy rates rise and rents decrease, the Inland Empire is experiencing the opposite.
Strong demand for office space in the Inland Empire resulted in a 7% decline in the vacancy rate to 10.2% in the third quarter.
While class A office space reported the highest vacancy rate in the Inland Empire at 14%, thanks to the addition of newly constructed space, class C remains the lowest at 8.3%.
The average asking gross lease rate for the Inland Empire office market increased 8% to $1.62 in the third quarter. The lease rate in the Inland Empire east region was $1.60, with the west reporting $1.71.
Cities reporting the highest lease rates included Corona, with an average of $1.86 per square foot, and Ontario, with an average of $1.76 per square foot.
Class A office space posted the highest rent at $1.69 per square foot, while class C space went for $1.35 per square foot.
Six office buildings totaling 254,597 square feet completed construction in the third quarter. That’s almost double last year’s 129,360 square feet of construction.
There is 162,012 square feet in the construction phase, while another 996,728 square feet is planned for the next two years.
Analysis provided by CB Richard Ellis’ Information Management.
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