Taking a look at 2009, the Inland Empire industrial market was hit hard by the nationwide recession.
Many had optimistic hopes for this year, but positive outlooks are slowly transforming to neutral outlooks for 2010.
The one bright spot was this market managed to close out 2009 with overall positive absorption.
Looking into 2010, the market is showing signs of recovery. Institutions are now beginning to build buildings again.
Some notable deals in the fourth quarter included IDS USA, a unit of Hong Kong-based distributor IDS Group, renewing 1.1 million square feet in Chino and a 575,457-square-foot lease signed by Clorox Co. in Redlands.
Commercial real estate, which held on longer than housing, hit a profound slump in the third quarter that seemed to threaten a much longer recovery at the time. The slump was created by many companies that downsized or went out of business altogether.
Tenants who continue to rent or decide to purchase buildings are demanding deep discounts and are getting them. These discounts have helped overall absorption as the fourth quarter ended with positive absorption of 386,938 square feet.
The Inland Empire West submarket continues to lead with the majority of the gross activity, closing out the fourth quarter with almost 2.8 million square feet of activity, while the east submarket was close behind with 2.7 million square feet of gross activity.
The third quarter’s availability rate of 15.8% decreased to 15.4% in the fourth quarter.
Conversely, the vacancy rate increased from 8.7% in the third quarter to 9%.
Office Market
During 2009 the Inland Empire office market struggled to recover amid the broader global recession.
But the year concluded on a high note as vacancy and unemployment rates decreased and seemed to stabilize while absorption and leasing activity improved in the fourth quarter.
The overall Inland Empire vacancy rate remained relatively steady at 24.3% in the fourth quarter, a slight decrease from the third quarter’s 24.7%.
The fourth quarter marked the second consecutive quarter of positive absorption for the market with 100,361 square feet.
Yet, the year-to-date total net absorption was a negative 294,592 square feet.
Sale and lease activity in the region improved at the end of 2009.
The most notable sales were a 55,000-square-foot user sale in the Canyon Springs submarket of Riverside to Western Municipal Water District and a 111,176-square-foot investment sale in Rancho Cucamonga.
The year ended with strong leasing activity as many large leases were signed.
Among the largest were the 51,888-square -foot West Coast University deal in Ontario, the 35,753-square-foot Art Institute of California-Inland Empire expansion in San Bernardino, the 24,801-square-foot California Preparatory School relocation in Redlands, the 13,300-square-foot One Legacy deal in Redlands and the 10,516-square-foot relocation of the Houghton Mifflin Harcourt publishing company in Rancho Cucamonga.
Data and analysis by CB Richard Ellis Group Inc.
