Timothy Kidd is a vice president at GRS Group. He can be reached at 323.853.0488 or via email at email@example.com
The Inland Empire is arguably the most significant market in commercial real estate’s industrial sector. It has more than 560 million square feet of supply, with 28 million square feet underway, and is where goods reach the rest of the country after unloading from the country’s largest ports, of Los Angeles and Long Beach.
This is by far the region’s commercial real estate claim to fame.
Don’t expect it to catch up to industrial, but the Inland Empire’s office market is looking pretty strong as well lately, too.
Cushman & Wakefield’s recent third-quarter national office report listed it as having the third-lowest vacancy in the country, at 7.5 percent. That’s a figure one would expect in more of a traditional office market, like Boston.
The largest metro surveyed in the eastern region, Ontario, with just under 3.8 million square feet of product, was at 7.3 percent, according to Cushman’s Inland Empire report (download here). The second largest, Rancho Cucamonga, with just more than 3.1 million square feet, came in a at a low 6.1 percent.
Slightly higher were the cities in the western portion, with Riverside and its 4.4 million square feet at 9.1 percent and San Bernardino, with 3.6 million square feet, at 11.8 percent. Even the latter bettered the 12.9 percent national average.
Granted, in some markets these totals would make up a handful of skyscrapers, but it shows that since the Great Recession, which devasted parts of the Inland Empire, developers have not made the mistake of overbuilding in the office sector.
Meanwhile, the unemployment rate, at 4.1 percent, is below the state average of 4.2 percent. Since 2007, the Inland Empire has seen employment increase 18.2 percent, to a total of 1.5 million jobs. Meanwhile, the area has experienced 11 consecutive quarters of decreasing vacancy rates.
A Kidder Mathews report on the area during the third quarter found that average rents were at $22.56, just five percent over 2018’s third quarter. There is currently only 629,428 square feet under construction in the area, with two projects making up the bulk of the development, both expected for delivery in February.
One is the 200,000-square-foot RUHS Medical Center campus medical office building, and the other is the 150,000-square-foot Sundance Corporate Center, in Beaumont, which is also planned for retail and restaurants.
Though it will unlikely ever be a major office city like others in California, with vacancy rates like these, more developers could possibly eye the Inland Empire for more development.
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