By MICHAEL FOLEY
The Inland Empire has been called the warehouse capital of the world.
It is popular with tenants and investors for its low vacancy rate, above national average projected population growth and the fact that it is home to a diverse group of warehouse tenants. But there are concerns about the future strength of the Inland Empire industrial warehouse market due to a drop off in imports caused by weakening consumer demand and loss of business to other ports in the U.S.
But the industrial market continued to grow in the fourth quarter.
The Inland Empire added 5.8 million square feet of space to the market, a significant jump from the third quarter. Tenant demand remains strong in the east submarket, which saw activity rise by more than 1 million square feet from the third quarter. Colton, Moreno Valley, Perris and Rialto lead the east submarket with a total of 2.6 million square feet of activity this quarter.
The east submarket has a greater under-construction pipeline thus giving buyers as well as tenants a variety of choices in size and features of industrial buildings to choose from. Overall absorption in the fourth quarter totaled 3.9 million square feet, an increase of 1.5 million square feet from the third quarter. The east submarket was the most active with 2.9 million square feet of absorption, compared with 934,368 square feet of net absorption in the west submarket.
Office Market
In spite of a softening economy and angst in the capital markets, investors continue to have confidence in commercial real estate. This, according to a recent Real Estate Investor Outlook survey, showed investors reported that they are still planning to increase their allocation to commercial real estate as compared with last year.
Although overall absorption was down for the Inland Empire, the cities of Corona, Grand Terrace and San Bernardino in the east submarket saw absorption in the fourth quarter with 20,570 square feet, 1,511 square feet and 60,742 square feet, respectively.
West Chino/Chino Hills and Rancho Cucamonga also saw absorption of 3,839 square feet and 34,042 square feet, respectively.
Asking rates for the market dipped from $1.94 per square foot in the third quarter to $1.89 per square foot in the fourth quarter. The under-construction pipeline tightened for the fourth quarter as new buildings were absorbed by companies looking to upgrade their current space for newer and more modern facilities.
Office employment, per the Employment Development Department, in the Inland Empire remained unchanged from quarter to quarter as losses in the finance, insurance, real estate and business services sectors were offset by the engineering and management sector.
Analysis provided by CB Richard Ellis’ Global Research and Consulting.
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