During the third quarter, the Inland Empire industrial market delivered 46 buildings totaling 6.8 million square feet of completed industrial product. The deliveries pushed the vacancy rate up to 4.4% despite approximately 7.9 million square feet of gross activity and 4.4 million square feet of positive net absorption. Across the board, the majority of vacancy rates in the Inland Empire cities remain in the single digits.
For the quarter, the average asking gross lease rate for industrial space in the Inland Empire industrial market remained constant at 40 cents per square foot per month, off a cent from the third quarter of 2000. This consistency can be attributed to the stable market conditions that the Inland Empire continues to experience. Average asking manufacturing and warehouse gross lease rates ranged from a low of 26 cents to a high of 68 cents in the third quarter.
At the end of the third quarter, the Inland Empire industrial market had a total of 5.9 million square feet of space under construction. The Inland Empire industrial market has 37 million square feet of space planned for the next two years.
The Inland Empire office vacancy rate experienced a marginal increase in the third quarter to 16.2% due to new construction deliveries. In a time when many office markets are posting negative net absorption, the Inland Empire office market had increased positive net absorption of 248,835 square feet in the third quarter, fueled by strong activity in Corona, Rancho Cucamonga and San Bernardino.
At $1.46 per square foot per month, the average asking full-service-gross lease rate for office space rose 4 cents from the second quarter rate. In the past 12 months, the average asking office lease rate appreciated approximately 6% from $1.37 in the third quarter of 2000. Cities with the highest lease rates included Corona, with an average of $1.78 per square foot, and Ontario, with an average of $1.72 per square foot.
During the third quarter, more than 197,000 square feet were added to the office base as development wrapped up on four buildings. One new building in Corona Main Place broke ground during the third quarter that will add 61,874 square feet upon completion. The Inland Empire office market had a total of 183,888 square feet under construction and 758,261 square feet in the planning stages at the end of the quarter.
Analysis provided by CB Richard Ellis’ Global Research and Consulting.
