The Inland Empire Industrial market flourished last year as tenant demand and activity propelled it to highs not seen since the early 2000s.
The fourth quarter ended with an overall average asking lease rate of 45 cents per square foot, up 6 cents over the first quarter. Asking lease rates in the Inland Empire West finished the year at 48 cents per square foot, up 6 cents over the first quarter, while the Inland Empire East recorded an average asking lease rate of 44 cents per square foot, also up six cents since the first quarter.
Landlords have increased rents due to declining vacancy rates and continued strong tenant demand. Rates also ticked as new construction completions commanded premium rates. CBRE Econometric Advisors forecasts that rents will continue up this year as demand keeps pace with available supply and new completions.
The vacancy rate in the Inland Empire ended the quarter at 3.3%, down from 3.8% in the third quarter and from 4.1% in the first quarter.
The Inland Empire office market’s average asking lease rate continued its slow upward climb during the quarter, rising 4 cents to $1.83 per square foot. Inland Empire East was responsible for most of the growth, as asking rates there jumped 6 cents to $1.86 per square foot while rates Inland Empire West rates increased 1 cent.
The vacancy rate declined to 14.7% from 15.1% in the third quarter. Occupancy improved in both submarkets. The period marked the 16th consecutive quarter of positive net absorption. Activity was essentially flat in most cities in the larger office markets.
The fourth quarter overall reinforced the “slow but steady” dynamic that has aptly described the Inland Empire office market during the recovery and expansion. Numbers in the region have slowly and steadily improved since the recession, and those gradual improvements seem almost certain to continue in the near term.
Analysis provided by CBRE Research
