Industrial Market
The Inland Empire industrial vacancy rate dropped to 3.84% in the second quarter, with approximately 9.1 million square feet of positive net absorption of industrial space. Across the board, vacancy rates in cities were in single digits. Rates ranged from a low of 0.73% in Colton to a high of 9.54% in the Redlands/Loma Linda area.
At 34 cents per square foot, the second-quarter average asking gross lease rate stabilized after two straight quarters of decline. Average asking gross lease rates ranged from a low of 2.6 cents per square foot in Redlands to a high of 41 cents per square foot in Corona.
Due to an exceptional volume of new construction deliveries, industrial construction reached a plateau after a year of steady increases. At the end of the second quarter, the Inland Empire industrial market had a total of 15.3 million square feet under construction. That is up 26% from the second 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 decreased slightly, and there was a continuation of healthy, positive net absorption.
The Inland Empire office vacancy rate decreased to 18.20%, the lowest in almost six years. The second-quarter rate was down 5% from the first quarter and a full 25% from the second quarter of 1999. Fueled by strong activity in Colton, Moreno Valley, Riverside and Ontario, the market as a whole experienced approximately 142,000 square feet of positive net absorption, up 17% for the quarter. Space under construction tripled to 229,584 square feet.
The second-quarter average asking lease rate for office space declined 1cent from the first quarter, to $1.12 per square foot. The average lease rate was $1.10 in the second quarter of 1999.
Four new office projects totaling 154,385 square feet broke ground in the second quarter. Approximately 230,000 square feet were under construction, up three-fold from 75,199 square feet under construction in the first quarter. Corona and Rancho Cucamonga, the most active cities, accounted for 91% of the second quarter’s total construction activity.
