Industrial Market
The Inland Empire is one of many areas seeing a growing need for contingent workers from employers in a wide variety of industries. In the fourth quarter, all major industrial sectors saw job growth. The region continued strong by adding 900 industrial jobs, of which, the trucking and warehousing sector displayed the most growth by increasing to 57,100 jobs. With 223,700 jobs, industrial employment accounts for 18.5% of the Inland Empire’s nonfarm jobs.
The fourth quarter’s 8.4 million square feet of gross lease and sale activity brought the yearly total to 34.8 million square feet. The vacancy rate decreased to 1.6%. The availability rate dropped to 4.8%. The average net lease rates have steadily increased to a high of 40 cents per square foot.
The industrial market has more than 26 million square feet under construction.
At the end of the fourth quarter, the Inland Empire completed development on 36 buildings for 4.4 million square feet. The Inland Empire east submarket completed development on eight projects totaling 2 million square feet. The west submarket had 28 projects totaling 2.4 million square feet.
Office Market
The Inland Empire’s office market has 18.5 million square feet of existing space and 1.6 million square feet under construction. Nearly 290,000 square feet was built in the fourth quarter. San Bernardino and Riverside counties combined are considered to be the fastest growing urban area in California and continue to serve companies and residents moving inland from the costal regions.
Unemployment for the fourth quarter stood at 5%, down 0.4% from the prior quarter. The Inland Empire’s rate is slightly higher than the national unemployment rate of 4.8%, and lower than the state’s 5.1%. The Inland Empire added 27,500 nonfarm jobs, while the office sector added 500 jobs overall in the quarter. In the past five years, the Inland Empire has created 179,300 jobs representing an 18% increase.
In the fourth quarter, the Inland Empire office market saw 213,033 square feet of positive net absorption bringing the year-to-date total to 1 million square feet, producing a vacancy rate of 9.4%, versus the prior quarter’s 9.2%. Class A office space reported the highest vacancy rate at 13.1%. Class B had the lowest rate at 6.75%.
The fourth-quarter average asking gross lease rate increased to $1.79 per square foot. The lease rate is a product of the Inland Empire east submarket rate of $1.80 and the Inland Empire west submarket rate of $1.96. For the sixth consecutive quarter, Corona had the highest lease rate in the Inland Empire with an average of $2.28 per square foot.
Analysis provided by CB Richard Ellis Global Research and Consulting.
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