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The industrial segment of the Inland Empire continued to show signs of recovery in the fourth quarter, posting 6.7 million square feet of gross activity to end 2012 with nearly 26.5 million square feet.
The industrial segment includes more than 5,000 buildings and 46.5 million square feet of space.
The fourth quarter saw 2.5 million square feet of positive net absorption, up from the prior period, to end the year at 11.6 million square feet.
Vacancy (6.6%) and availability (11.4%) rates ticked slightly higher in the fourth quarter, in large part due to nine buildings that completed construction, adding 4.1 million square feet, with 3.1 million square feet remaining to be leased.
The Inland Empire’s office segment, which includes nearly 700 buildings and 25 million square feet of space, also saw improvement in terms of market fundamentals.
The vacancy rate continued to tick downward, although it has stayed above the 20% mark since the end of 2008. The rate dropped to 21.3% in the fourth quarter, down from 23.2% the prior period. That’s the largest quarterly decline in the vacancy rate since the recession.
The drop in vacancies came on 471,000 square feet of positive net absorption in the fourth quarter, more than double the amount recorded the first three quarters of the year. The trend is expected to continue with the ongoing recovery in office jobs in the region.
The average asking lease rate for office space gained 3 cents in the fourth quarter, to $1.73 per square foot. The region still has a competitive advantage on price compared with other Southern California markets.
Analysis provided by CBRE Research.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.