First Quarter 201 Industrial Market Report Inland Empire Market Overview . First Quarter 2017 /...
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Partnership. Performance. avisonyoung.com Market Overview First Quarter 2017 / Industrial Market Report Inland Empire Market Facts 5.3% Inland Empire Unemployment Rate -66,016 SF Negative Net Absorption Current Quarter 5.40% Total Vacancy Rate Up From 4.70% In Q4 2016 $0.49 PSF Asking Rental Rate Weighted Average Transaction Volume by Property Sector 4% 36% 16% 31% 13% Office Industrial Retail Multi‐Family Land The Inland Empire industrial market is performing at optimal levels with a healthy economy at the start of the New Year of 2017. Vacancy has remained consistent at tight levels which have been mostly flat, year-over-year for the fourth year in a row. Reliable leasing demand has allowed rental rate pricing to move higher year-over- year at a modest pace. The counties of Riverside and San Bernardino, which make up the Inland Empire market, are experiencing strong economic fundamentals, and rapid growth in population and quality inventory. These factors are driving heightened developer interest and elevated investor appetite. The Inland Empire is a powerhouse of industrial inventory that supports the demands of the entire Southern California region. Construction activity resumed rapidly post-recession and has met pre-recession levels with fervor. As of the first quarter of 2017, vacancy in the Inland Empire’s industrial market increased to 5.4%, up from the previous quarter at 4.7%, yet up only slightly from the same time in the previous year at 5.2%. On a year-over-year basis, vacancy has been hovering around flat levels, with a slight trend toward contraction. Competitive vacancy levels have been sustainable in the market in spite of the consistent addition of new inventory. Rental rates for the entire market on average have reached $0.49 psf NNN as of the first quarter of 2017, a slim increase over the previous quarter, and a more significant increase seen from $0.46 psf NNN at the same time in the previous year. The Inland Empire industrial market recorded a total net absorption of negative 66,016 sf for the quarter, and positive 18,831,228 sf for the most recent 12 month period. The market had 115 industrial projects under construction at the first quarter of the year, amounting to 26,798,599 sf of new inventory that is expected to be delivered in 2017 and 2018. The Inland Empire’s unemployment rate, as of the first quarter of the year, dropped to 5.3%, down from 5.9% one year earlier. Within the market, unemployment was 5.5% in Riverside County and 5.2% in San Bernardino County.
Transcript of First Quarter 201 Industrial Market Report Inland Empire Market Overview . First Quarter 2017 /...
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Market Overview
First Quarter 2017 / Industrial Market Report
Inland Empire
Market Facts
5.3%Inland Empire
Unemployment Rate
-66,016 SFNegative Net Absorption
Current Quarter
5.40%Total Vacancy Rate
Up From 4.70% In Q4 2016
$0.49 PSFAsking Rental RateWeighted Average
Transaction Volume by Property Sector
4%
36%
16%
31%
13%
OfficeIndustrialRetailMulti‐FamilyLand
The Inland Empire industrial market is performing at optimal levels with a healthy economy at the start of the New Year of 2017. Vacancy has remained consistent at tight levels which have been mostly flat, year-over-year for the fourth year in a row. Reliable leasing demand has allowed rental rate pricing to move higher year-over-year at a modest pace. The counties of Riverside and San Bernardino, which make up the Inland Empire market, are experiencing strong economic fundamentals, and rapid growth in population and quality inventory. These factors are driving heightened developer interest and elevated investor appetite.
The Inland Empire is a powerhouse of industrial inventory that supports the demands of the entire Southern California region. Construction activity resumed rapidly post-recession and has met pre-recession levels with fervor. As of the first quarter of 2017, vacancy in the Inland Empire’s industrial market increased to 5.4%, up from the previous quarter at 4.7%, yet up only slightly from the same time in the previous year at 5.2%. On a year-over-year basis, vacancy has been hovering around flat levels, with a slight trend toward contraction. Competitive vacancy levels have been sustainable in the market in spite of the consistent addition of new inventory.
Rental rates for the entire market on average have reached $0.49 psf NNN as of the first quarter of 2017, a slim increase over the previous quarter, and a more significant increase seen from $0.46 psf NNN at the same time in the previous year.
The Inland Empire industrial market recorded a total net absorption of negative 66,016 sf for the quarter, and positive 18,831,228 sf for the most recent 12 month period. The market had 115 industrial projects under construction at the first quarter of the year, amounting to 26,798,599 sf of new inventory that is expected to be delivered in 2017 and 2018.
The Inland Empire’s unemployment rate, as of the first quarter of the year, dropped to 5.3%, down from 5.9% one year earlier. Within the market, unemployment was 5.5% in Riverside County and 5.2% in San Bernardino County.
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Top Leases
Top Sales
Under Construction
Asking Rent Vacancy Rates Net Absorption
Inland Empire First Quarter 2017 / Industrial Market Report
2.00%
4.00%
6.00%
8.00%
10.00%
2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1$0.20
$0.28
$0.36
$0.44
$0.52
$0.60
2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1‐200,000
800,000
1,800,000
2,800,000
3,800,000
4,800,000
2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1
Buyer Price SF P/SFAddress
7145 Arlington Ave, Riverside Central Green
Seller
The Abbey Company $17,850,000 131,263 $136
1590-1690 Dan Kipper Dr, Riverside Industrial Property Trust, Inc. CT Realty Investors $15,800,000 152,591 $104
3900 Hamner Ave, Eastvale TA Realty Fleming Living Family Trust $14,300,000 168,346 $85
1651 S Carlos Ave, Ontario Cabot Properties, Inc. Morgan & Sampson, Inc. $14,150,000 147,484 $96
2565 Sampson Ave, Corona Industrial Property Trust, Inc. Rexco Development $9,356,500 72,933 $128
SF CompletionAddress
Citrus Commerce Center, Fontana
Submarket
East San Bernardino
Developer
Alere Property Group, LLC 1,837,279 Q2 2017
Majestic Chino Gateway, Chino West San Bernardino Majestic Realty Co. 1,592,000 Q4 2017
Crossroads Logistics Center, Beaumont North Riverside Master Development Corp. 1,489,240 Q2 2017
Duke Perris Logistics Center, Perris South Riverside Ridge Property Trust 1,244,874 Q2 2017
Goodman Commerce Center, Eastvale North Riverside Goodman Birtcher North America 1,187,719 Q2 2017
Tenant Type SF
The Braun New
Address
1151 S Mildred St, Ontario
Submarket
West San Bernardino 604,178
Kuehne & Nagel Renewal 1464 W Merrill Ave, Rialto East San Bernardino 436,650
Seldat New 9687 Transportation Way, Fontana East San Bernardino 414,415
Custom Goods Sublease 13479 Valley Blvd, Fontana East San Bernardino 410,800
Gildan Sublease 11296 Harrell St, Jurupa Valley North Riverside 353,361
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First Quarter 2017 / Industrial Market Report Inland Empire
0.00%
5.00%
10.00%
15.00%
20.00%
2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2016 Q1
South Riverside North Riverside Coachella ValleyWest San Bernardino East San Bernardino High Desert San Bernardino
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2016 Q1
Rental Rate by Submarket
South Riverside North Riverside Coachella ValleyWest San Bernardino East San Bernardino High Desert San Bernardino
Vacancy by Submarket
SUBMARKET SUBMARKET DIVISIONS CITIES WITHIN SUBMARKETTemecula / Murrieta / Lake Elsinore Temecula, Murrieta, Lake Elsinore, Wildomar, WinchesterPerris / Menifee Perris, Menifee, Nuevo, Romoland, Sun City
Hemet Hemet, San Jacinto
Corona Corona, NorcoRiverside City Eastvale, Jurupa Valley, Mira Loma, Riverside City‐North
Moreno Valley Moreno Valley, Riverside City‐SouthBeaumont / Banning Beaumont, Banning, Cabazon, Calimesa
Coachella / Indio Coachella, Indio, Mecca, Thermal
Palm Desert / Palm Springs Palm Desert, Palm Springs, North Palm Springs, Desert Hot Springs, Bermuda Dunes, Cathedral City, Thousand Palms, Rancho Mirage, Indian Wells, La QuintaChino Chino, Chino Hills
Airport Area Ontario, Rancho Cucamonga, Upland, Etiwanda, MontclairSan Bernardino City / Redlands San Bernardino City, Redlands, Highland, Mentone, Yucaipa
Fontana / Rialto Fontana, Rialto, Colton, Grand Terrace, Loma Linda, Bloomington
Victorville / Hesperia / Adelanto Victorville, Hesperia, Adelanto, Apple Valley, Oak Hills, Siver LakesBarstow Barstow
Coachella Valley
West San Bernardino
East San Bernardino
High Desert San Bernardino
North Riverside
South Riverside
Q1 2017 Inventory (SF)
Q1 2017 Vacancy (SF)
Q1 2017 Vacancy (%)
Q4 2016 Vacancy (%)
Current Quarter
Absorption
Year-To-Date Absorption
Q1 2017 Rental Rates
NNN
Q4 2016 Rental Rates
NNN
Qtr/Qtr Change (%)
Current Quarter Deliveries
Under Construction Quarter-End
South RiversideTemecula / Murrieta / Lake Elsinore 12,411,884 455,517 3.70% 3.40% 52,150 52,150 $0.71 $0.68 4.41% 166,251 74,800
Perris / Menifee 19,078,864 532,540 2.80% 3.70% 886,445 886,445 $0.41 $0.38 7.89% 746,467 3,908,502
Hemet 1,417,614 0 0.00% 0.30% 4,300 10,134 $0.42 $0.42 0.00% 0 0
South Riverside TOTAL 32,908,362 988,057 3.00% 3.40% 942,895 948,729 $0.55 $0.53 3.77% 912,718 3,983,302
North RiversideCorona 25,476,111 1,270,388 5.00% 6.40% 353,029 353,029 $0.58 $0.54 7.41% 0 1,080,686
Riverside City 60,071,754 1,309,883 2.20% 1.90% -31,252 -31,252 $0.58 $0.57 1.75% 122,585 4,109,489
Moreno Valley 35,593,050 2,278,104 6.40% 5.20% -307,614 -307,614 $0.44 $0.47 -6.38% 121,390 4,350,120
Beaumont / Banning 3,216,957 81,452 2.50% 0.20% -74,432 -74,432 $0.32 $0.32 0.00% 0 1,489,240
North Riverside TOTAL 124,357,872 4,858,375 4.00% 3.70% 14,163 14,163 $0.43 $0.44 -2.27% 243,975 11,029,535
Coachella ValleyIndio / Coachella 3,638,017 141,955 3.90% 4.20% 11,656 11,656 $0.83 $0.85 -2.35% 0 0
Palm Desert / Palm Springs 3,403,313 170,550 5.00% 4.90% -2,360 -2,360 $0.74 $0.65 13.85% 0 N/A
Coachella Valley TOTAL 7,041,330 312,505 4.40% 4.60% 9,296 9,296 $0.79 $0.73 8.22% 0 0
West San BernardinoChino 40,847,350 697,504 1.70% 0.90% -321,902 -321,902 $0.55 $0.55 0.00% 0 3,649,920
Airport Area 139,515,467 6,458,304 4.60% 3.40% -218,547 -218,547 $0.59 $0.60 -1.67% 1,562,248 1,116,738
West San Bernardino TOTAL 180,362,817 7,155,808 4.00% 2.90% -540,449 -540,449 $0.58 $0.59 -1.69% 1,562,248 4,766,658
East San BernardinoSan Bernardino City / Redlands 58,328,933 6,099,621 10.50% 10.30% -109,624 -109,624 $0.46 $0.38 21.05% 0 2,658,080
Fontana / Rialto 87,048,263 6,350,423 7.30% 6.20% -288,385 -288,385 $0.63 $0.50 26.00% 743,304 4,361,024
East San Bernardino TOTAL 145,377,196 12,450,044 8.60% 7.80% -398,009 -398,009 $0.54 $0.45 20.00% 743,304 7,019,104
High Desert San BernardinoVictorville/Hesperia/Adelanto 12,604,733 969,300 7.70% 7.60% -11,147 -11,147 $0.56 $0.56 0.00% 0 N/A
Barstow 689,771 148,102 21.50% 7.60% -16,857 -16,857 $0.00 $0.45 -100.00% 0 0
North San Bernardino TOTAL 13,294,504 1,117,402 8.40% 8.20% -28,004 -28,004 $0.56 $0.55 1.82% 0 0
INLAND EMPIRE20,000 SF to 49,999 SF 72,136,968 2,163,303 3.00% 3.50% 569,596 569,596 $0.75 $0.73 2.74% 11 Bldgs 40 Bldgs
50,000 SF to 149,999 SF 101,268,156 5,453,731 5.40% 3.90% -957,148 -957,148 $0.57 $0.57 0.00% 5 Bldgs 34 Bldgs
150,000 SF and larger 329,936,957 19,338,085 5.90% 5.20% 321,536 321,536 $0.34 $0.36 -5.56% 6 Bldgs 41 Bldgs
TOTAL 503,342,081 26,955,119 5.40% 4.70% -66,016 -66,016 $0.49 $0.48 2.08% 3,462,245 (SF) 26,798,599 (SF)
Vacancy Net Absorption Avg. Advertised Rates Construction Pipeline
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Report Prepared By:Amber Jagers - Research Manager 4225 Executive Sq, Ste 600La Jolla, CA [email protected]
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