Industrial Market
Gross activity throughout 2006 has shown the Inland Empire’s strength with about 25 million square feet of industrial space leased or sold, 31% of which was produced during the third quarter.
At the end of August, unemployment in the Inland Empire was 4.9%, slightly up 0.6 percentage points from the previous quarter and down 0.5 points from the same quarter one year ago.
The Inland Empire’s industrial sector added 2,600 jobs this quarter to stand at 235,600 jobs. The trucking and warehouse sector saw the largest increase during the third quarter with an increase of 2,100 jobs. Industrial employment accounts for 19% of total non-farm employment in the Inland Empire.
Availability rates in the Inland Empire industrial market decreased 0.08 basis points during the third quarter and stood at 6.1%.
Vacancy levels also decreased 0.04 basis points to end the quarter with a rate of 3.2%. Accordingly, average asking net lease rates climbed slightly from 41 cents to 42 cents.
The sale prices in the Inland Empire experienced a more dramatic increase from the second quarter price of $98.69 per square foot to the third quarter price of $105.54 per square foot.
Office Market
Options for prospective tenants will expand seeing that the Inland Empire’s office market is expected to increase by approximately 1.7 million square feet in the next two years. The demand for office space is expected to remain strong as the population, currently at 4 million, continues to grow.
The Inland Empire saw about 153,700 square feet of positive net absorption during the third quarter. Vacant office space in the Inland Empire decreased 5.1% from the second quarter to 8.8%.
The average asking gross lease rate for office space remained stable during the quarter at a rate of $1.85 per square foot for full service gross leases.
Two new office projects completed construction during the third quarter, delivering 68,000 square feet of space. Demand for new office space should be met with about 1.7 million square feet in the construction phase with another 3.8 million square feet planned in the next two years.
Analysis provided by CB Richard Ellis’ Group Inc.’s Global Research and Consulting.
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