Real Estate Watch: Inland Empire
Top-Ranked Inland Empire Stays Hot in Q3
Industrial Market
Activity in the Inland Empire industrial market continued to be strong in the third quarter, although the growth rate slowed.
About 1.2 million square feet of industrial space came on the market in the quarter, with 5.5 million square feet still under construction.
There was about 4.8 million square feet of lease and sale activity in the quarter; the region had 1.6 million square feet of positive net absorption. The Inland Empire ranked No. 1 in net absorption performance among 51 metropolitan statistical areas in the most recent study by Boston-based Torto Wheaton Research.
The availability rate fell to 9.4% in the quarter. The region’s highest vacancy rate of 11% was seen in buildings between 70,000 square feet and 79,999 square feet in the west end of the Inland Empire.
Overall, there was about 4.8 million square feet of gross activity in the third quarter. The city of Ontario was the most active, with 1.6 million square feet of sale and lease activity, or 34% of the total.
Average asking manufacturing and warehouse gross lease rates ranged from a low of 28 cents per square foot to 50 cents per square foot. The average in the quarter was 39 cents.
Big-box industrial buildings,100,000 square feet and greater,had an average asking lease rate of 37 cents per square foot in the quarter.
Office Market
Five buildings with 129,360 square feet of space came on line during the quarter, leaving 183,915 square feet still in the construction phase.
The added space, which came on line mostly vacant, marginally boosted office market vacancy rates to 11% from 10.7% in the second quarter.
The Inland Empire office market has more than 16 million square feet of office space. About 600,000 square feet of space is in the planning stage.
There was 108,186 square feet of positive absorption in the quarter, led by strong showings in downtown San Bernardino, Rancho Cucamonga and Commercenter/Tri-City. Year-to-date net absorption is 480,164 square feet, down slightly from a year ago.
As the Inland Empire office market continues to mature, construction activity is expected to increase.
Analysis provided by CB Richard Ellis’ Global Research and Consulting.
