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Inland Empire Market Reports

Inland Empire Office Market

Average Asking Rent (Price/SF/Mo) $1.64
Vacancy Rate (%) 11.3%
Net Absorption (SF) 23,634

Annual net absorption activity has been positive for 6.5 years. This quarter, absorption gains were moderate with 23,634 square feet. Similar to past quarters, net occupancy gains in the Airport submarket were levied against mixed results in Riverside and San Bernardino, the metro's two other major submarkets. Office vacancy resembles a 10-year low, and rents have begun to slowly increase. The average Class A asking rent of $2.04/SF was 12.6% below last cycle's high, reached in early 2008. This is in contrast to Orange County and Los Angeles, where rents are near or exceed peak rates. A lack of new construction and consistent net absorption gains, have left few large blocks (20,000 square feet or greater) for lease. This is especially true for Class A product. For the first time since the Great Recession, developers are in active discussions on speculative and build-to-suit office construction. Notably, in the Airport and West submarkets. Financial services and healthcare companies are very active, and remain the main drivers for potential new office construction. While local job growth exceeded California's and the nation's in May, most gains came from blue-collar professions.

Inland Empire Industrial Market

Average Asking Rent (Price/SF/Mo) $0.52
Vacancy Rate (%) 3.4%
Net Absorption (SF)  4,100,000

Construction activity is not slowing down. Thirty-one million square feet is under way, a 131% increase from one year ago. New construction is diverse across size segments. There are 132 buildings currently underway, which includes 73 under 100,000 square feet; 37 between 100,000 and 499,999 square feet; and 22 over 500,000 square feet. Diverse construction activity hints at diverse tenant demand. All tenant profiles are active in the marketplace. Vacancy has been under 5.0% for 17 consecutive quarters, while the average asking rent is hovering near a record high.Net absorption in the second quarter totaled 4.1 million square feet, as notable move-outs from M. Block & Sons (557,213 square feet) and Hino Motors Manufacturing USA (230,484 square feet) were levied against big move-ins from JC Penney (624,627 square feet) and Essendant Co. (599,113 square feet). Net absorption was positive for the 31st-straight quarter. The bulk of this quarter's activity came from new construction occupancies.

Inland Empire Office Market Report
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Inland Empire Industrial Market Report
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