The Inland Empire industrial market continued to flourish in the third quarter with activity and tenant demand strong in almost every size range.
Tenant demand for product less than 500,000 square feet continue strong. Demand for product over 900,000 square feet has steadily picked up, which is a good omen, because there are several 1-million-square-foot buildings scheduled to be finished by year-end and early next year.
The overall average asking lease rate ended the quarter at 42 cents per square foot, up 1 cent over the second quarter. Overall, the smaller the product the larger the rent growth is expected to be as the year draws to a close.
The Inland Empire continues to benefit from a large amount of available land for future development. There are currently 57 buildings under construction totaling over 20.7 million square feet, of which 4.4 million square feet is preleased.
Office Market
The office market had a quietly positive quarter as some larger deals in a few select markets moved the needle in a positive direction. There was a small amount of negative absorption in the Western Inland Empire during Q3 2015 that was outweighed by stronger data in the Eastern region.
The average asking lease rate in the Inland Empire continued its slow upward drift, increasing 2 cents to $1.79 per square foot.
It was a slower quarter overall for leasing activity in the market; as such, activity in a few select cities drove the headline numbers.
If we take a longer view, 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
