Real Estate Watch: Inland Empire
Inland Empire Posts Strong Industrial, Office Results
Industrial Market
The Inland Empire industrial market maintained its strong level of activity in the second quarter.
About 4.7 million square feet of industrial space came online in the quarter.
High second-quarter demand for space resulted in 9.5 million square feet of gross industrial activity. Ontario led the Inland Empire with 2.9 million square feet of sale and lease activity. There was 4.9 million square feet of net absorption in the quarter thanks to the strong demand. Year-to-date net absorption rose to 8.8 million square feet.
Average asking lease rates for manufacturing and warehouse space was 39 cents per square foot in the quarter, ranging from 23 cents to a high of 79 cents. Average asking sale prices for the Inland Empire’s western region were $52 per square foot vs. the eastern market’s $46.37 per square foot.
Office Market
Second-quarter market indicators for the Inland Empire office market continue to be strong across the board.
Vacancy rates declined, lease rates increased, and healthy net absorption continued. Two projects broke ground in the second quarter, adding about 42,000 square feet of construction activity.
The office vacancy rate for the Inland Empire fell to 10.6% in the second quarter. That’s down 11% from the prior quarter. There was about 181,000 square feet of positive net absorption in the period. The vacancy rate has fallen continuously in the last 16 quarters to the 10.6% level, down from 25% in the second quarter of 1998.
Led by Colton, Corona and San Bernardino, the Inland Empire’s office market had about 181,000 square feet of positive net absorption. That’s 17% lower than a year ago, when the market had 218,000 square feet of positive net absorption. But the positive net absorption is up 9% from the first half of 2001.
The average asking gross lease rate was about 4% higher at $1.48 in the second quarter vs. a year ago. Riverside, with an average of $1.73 per square foot and Corona, with an average of $1.76 per square foot, demanded the highest office lease rates in the county. Corona had the largest spike, up 17 cents from the last quarter.
Analysis provided by CB Richard Ellis’ Global Research and Consulting.
