Industrial Market
The Inland Empire industrial vacancy rate dropped to 4.53% in the first quarter as approximately 5.8 million square feet of positive net absorption were experienced. Across the board, vacancy rates in cities were in single digits. Rates ranged from a low of 2.22% in Colton to a high of 9.95% in San Bernardino.
After a year of quarterly increases, the average asking gross lease rate for industrial space in the Inland Empire Industrial Market dropped in the first quarter to 34 cents per square foot,presumably, as the more desirable (higher-priced) space became occupied, and the less desirable (lower-priced) space remained on the market. It was a decrease of 10.5% from 38 cents in the fourth quarter of 1999.
Optimism among developers continued to push the new-construction total higher, to 17.5 million square feet, a 66% increase over last year and the greatest volume in nearly a decade. It also is a 2% increase from the 17.2 million square feet under construction at the end of the fourth quarter of 1999.
Office Market
Across the board, the first-quarter market indicators signaled a strengthening office market. Vacancy rates continued to decline, lease rates continued to increase and healthy, positive net absorption continued to be experienced.
The Inland Empire office vacancy rate decreased to 18.65%, the lowest rate in more than five years.
Lease rates for office space hit the all-time high rate of $1.13 per square foot first set nearly 10 years ago in 1990. The rate increased 1 cent in the fourth quarter of 1999 and 5 cents from $1.08 in the first quarter of 1999.
The Inland Empire office market started the new millennium with approximately 122,000 square feet of positive net absorption. Fueled by the submarkets of Hunter Park and Magnolia Center, the Inland Empire office market remains strong.
In the first quarter, the Inland Empire office market had one building under construction totaling 75,199 square feet, the same as the fourth quarter. New construction is diminishing as no new projects are slated to break ground in the near term. The lack of new construction should have a positive effect on the office market. Vacancy rates should continue their downward trend and lease rates should continue to strengthen and appreciate as more office space is absorbed in the Inland Empire.
