INDUSTRIAL MARKET REPORT
Inland Empire
3rd Quarter 2016
Produced in partnership with
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Table of Contents/
Methodology of Tracked Set
Xceligent is a leading provider of verified commercial real estate information which assists real estate
professionals, appraisers, owners, investors and developers that make strategic decisions to lease, sell,
buy and develop commercial properties.
Table of Contents and Methodology/Map
2-3
Market Overview
4-5
Statistics by Market
Vacancy Rates & Asking Rates
6
7-8
Leasing & Absorption
9
New Construction
10
Industrial Advisory Board Members
11
Xceligent Team
12
The Inland Empire tracked set consists of an inventory of buildings considered to be competitive by
Tracked
Inventory
(Industrial)
The total square feet (sf) of all existing single and multi tenant industrial properties greater
than 10,000 sf. Flex/R&D buildings with an office build out greater than 30% and a parking
ratio greater than 3:1,000 are excluded.
Direct vacant (sf)
The total of the vacant square footage in a building that is being marketed by an agent
representing the landlord.
Net Absorption
The net change in physically occupied space from quarter to quarter, expressed in square
feet.
Sublease (sf)
Space that is offered for lease by a current tenant, or his agent, within a property. Whether
the tenant is paying rent or not, the space is considered vacant only if it is unoccupied.
Total Available
(sf)
All of the available leasable space within a building, whether it is occupied or vacant, for
direct lease or sublease space.
Total Vacant (sf)
The total of all of the vacant square footage within a building, including both direct and
sublease space.
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
2
Industrial Market Map
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
3
Inland Empire Industrial Overview
Overview

The Inland Empire closed out the third quarter of 2016 with 433,715 square feet (sf) of positive net
absorption.

Despite recording another quarter of positive net absorption, the vacancy rate increased from 3.1% to
3.8% due to several projects being delivered vacant.

IE West took a big hit with the closing of Sports Authority & Sport Chalet. The two bankrupt companies
vacated a combined 901,551 sf of distribution space in the Western submarket.

18.5 million square feet of new product has been delivered so far in 2016, 7.1 million sf still remains
vacant.

Floor & Decor inked the largest lease of the quarter, taking down 1.1 million sf at the March Business
Center in Moreno Valley.
# of Bldgs
Inland Empire East
Whse/Mfg Class A
Whse/Mfg Class B
Whse/Mfg Class C
Inland Empire West
Whse/Mfg Class A
Whse/Mfg Class B
Whse/Mfg Class C
Overall
Inventory (sf)
2,821
436
1,230
1,155
3,481
644
2,056
781
6,302
# of Bldgs
Inland Empire East
Whse/Mfg Class A
Whse/Mfg Class B
Whse/Mfg Class C
Inland Empire West
Whse/Mfg Class A
Whse/Mfg Class B
Whse/Mfg Class C
Overall
218,203,257
114,224,644
69,556,849
34,421,764
282,600,021
111,701,504
147,645,893
23,252,624
500,803,278
Inventory (sf)
2,821
436
1,230
1,155
3,481
644
2,056
781
6,302
# of Bldgs
218,203,257
114,224,644
69,556,849
34,421,764
282,600,021
111,701,504
147,645,893
23,252,624
500,803,278
Inventory (sf)
Total Vacancy Rate Total Quarterly Net YTD Total Net
(%)
Absorption (sf)
Absorption (sf)
Total Available (sf) Total Vacant (sf)
19,052,454
15,326,568
2,592,243
1,133,643
12,544,073
6,181,837
5,618,663
743,573
31,596,527
Direct Available
(sf)
17,696,652
14,547,846
2,326,458
822,348
10,952,104
5,236,536
4,998,104
717,464
28,648,756
13,162,460
11,758,727
928,616
475,117
5,909,046
3,411,933
2,265,274
231,839
19,071,506
6.0%
10.3%
1.3%
1.4%
2.1%
3.1%
1.5%
1.0%
3.8%
Direct Vacancy
Rate (%)
Direct Vacant (sf)
13,145,320
11,758,727
911,476
475,117
5,882,947
3,411,933
2,241,874
229,140
19,028,267
Available Sublease Sublease Vacant
(sf)
(sf)
6.0%
10.3%
1.3%
1.4%
2.1%
3.1%
1.5%
1.0%
3.8%
1,645,939
815,648
178,251
652,040
-1,212,224
-781,838
-724,199
293,813
433,715
Direct Quarterly
Net Absorption (sf)
1,645,079
815,648
177,391
652,040
-1,267,774
-793,838
-765,949
292,013
377,305
6,395,500
5,141,056
511,129
743,315
288,950
626,097
-553,055
215,908
6,684,450
YTD Direct Net
Absorption (sf)
6,109,475
4,980,261
400,097
729,117
178,593
626,097
-666,111
218,607
6,288,068
Sublease Vacancy Sublease Quarterly YTD Sublease Net
Rate (%)
Absorption (sf)
Absorption (sf)
Inland Empire East
2,821
218,203,257
1,355,802
17,140
0.0%
860
286,025
Whse/Mfg Class A
436
114,224,644
778,722
-
0.0%
-
160,795
Whse/Mfg Class B
1,230
69,556,849
265,785
17,140
0.0%
860
111,032
Whse/Mfg Class C
1,155
34,421,764
311,295
-
0.0%
-
14,198
Inland Empire West
3,481
282,600,021
1,591,969
26,099
0.0%
55,550
110,357
Whse/Mfg Class A
644
111,701,504
945,301
-
0.0%
12,000
-
Whse/Mfg Class B
2,056
147,645,893
620,559
23,400
0.0%
41,750
113,056
Whse/Mfg Class C
Overall
781
6,302
23,252,624
500,803,278
26,109
2,947,771
2,699
43,239
0.0%
0.0%
1,800
56,410
-2,699
396,382
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
4
Inland Empire Industrial Overview
Historical Vacancy Rate & Net Absorption
7,000,000
7.0%
6.5%
6,000,000
6.0%
5,000,000
5.5%
4,000,000
5.0%
4.5%
3,000,000
4.0%
2,000,000
3.5%
3.0%
1,000,000
2.5%
-
2.0%
3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2016
Historical Vacancy Rates by Class
Whse/Mfg Class A
Whse/Mfg Class B
Whse/Mfg Class C
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2016
Historical Net Absorption by Class
Whse/Mfg Class A
6,500,000
Whse/Mfg Class B
Whse/Mfg Class C
5,500,000
4,500,000
3,500,000
2,500,000
1,500,000
500,000
(500,000)
3Q 2015
4Q 2015
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
1Q 2016
2Q 2016
3Q 2016
5
Statistics by Market
# of Bldgs
Inventory (sf)
Total Vacant (sf)
Sublease Vacant Vacancy Rate
(sf)
(%)
Total Quarterly
Absorption (sf)
YTD Total Net
Absorption (sf)
Inland Empire East
2,821
218,203,257
13,162,460
17,140
6.0%
1,645,939
6,395,500
10,000 - 24,999 sf
1,473
23,170,022
379,764
0
1.6%
24,535
216,335
25,000 - 49,999 sf
606
21,109,906
516,099
0
2.4%
69,576
44,321
50,000 - 99,999 sf
334
22,829,581
597,079
17,140
2.6%
-56,988
-179,601
100,000 - 249,999 sf
218
32,192,829
590,828
0
1.8%
198,295
1,019,806
250,000 - 499,999 sf
87
32,205,971
3,241,831
0
10.1%
-331,955
1,615,562
500,000 - 749,999 sf
50
31,002,505
3,891,388
0
12.6%
639,473
1,473,435
Greater than 750,000 sf
53
55,692,443
3,945,471
0
7.1%
1,103,003
2,205,642
Inland Empire West
3,481
282,600,021
5,909,046
26,099
2.1%
-1,212,224
288,950
10,000 - 24,999 sf
1,652
25,671,307
226,325
0
0.9%
-1,822
69,309
25,000 - 49,999 sf
708
24,477,197
410,296
24,299
1.7%
53,632
23,908
50,000 - 99,999 sf
414
28,906,396
399,759
1,800
1.4%
-66,464
-6,295
100,000 - 249,999 sf
411
62,382,287
617,958
0
1.0%
-11,129
383,680
250,000 - 499,999 sf
204
73,075,731
2,041,646
0
2.8%
-452,362
474,141
500,000 - 749,999 sf
55
33,520,334
1,475,450
0
4.4%
-734,079
-267,663
Greater than 750,000 sf
37
34,566,769
737,612
0
2.1%
0
-388,130
6,302
500,803,278
19,071,506
43,239
3.8%
433,715
6,684,450
Overall
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
6
Vacancy Rates & Asking Rates
Vacancy Rate %
3Q 2015
4Q 2015
Weighted Average Asking Rent (NNN)
1Q 2016
2Q 2016
3Q 2016
3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2016
Inland Empire East
6.2%
5.7%
5.7%
5.7%
6.0%
$0.44
$0.44
$0.42
$0.44
$0.46
Whse/Mfg Class A
9.6%
8.8%
9.1%
9.0%
10.3%
$0.40
$0.40
$0.39
$0.39
$0.42
Whse/Mfg Class B
2.0%
2.0%
1.3%
1.6%
1.3%
$0.55
$0.45
$0.44
$0.48
$0.49
Whse/Mfg Class C
4.5%
3.5%
4.0%
3.3%
1.4%
$0.85
$0.86
$0.90
$0.79
$0.83
Inland Empire West
1.8%
1.3%
1.7%
1.1%
2.1%
$0.42
$0.51
$0.53
$0.57
$0.58
Whse/Mfg Class A
2.4%
1.3%
2.4%
0.8%
3.1%
$0.37
$0.49
$0.53
$0.53
$0.53
Whse/Mfg Class B
1.4%
1.2%
1.1%
1.0%
1.5%
$0.44
$0.55
$0.54
$0.60
$0.60
Whse/Mfg Class C
2.0%
1.9%
2.5%
2.3%
1.0%
$0.60
$0.50
$0.51
$0.67
$0.67
Overall
3.7%
3.2%
3.4%
3.1%
3.8%
$0.43
$0.46
$0.45
$0.50
$0.50
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
7
Vacancy Rates & Asking Rates
Vacancy Rate by Submarket
6.0%
2.1%
Inland Empire East
Inland Empire West
Weighted Average Asking Rent by Market (NNN)
$0.58
$0.46
Inland Empire East
Inland Empire West
Asking Rent Range by Class (NNN)
$1.20
$1.00
$1.00
$0.80
$0.60
$0.40
$0.75
$0.64
$0.70
$0.67
$0.52
$0.46
$0.38
$0.31
$0.20
Whse/Mfg Class A
Whse/Mfg Class B
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Whse/Mfg Class C
8
Leasing & Absorption
Largest Leases & Absorption Changes
Property Name
Occupied or
Vacated (sf)
24101 Iris Ave
Tenant Name
1,103,003
Submarket
Specific Use
Floor & Décor
Inland Empire East
Whse/Mfg
11188 S Citrus Ave
639,473
Walmart
Inland Empire West
Whse/Mfg
11618 Mulberry
633,953
LuLaRoe
Inland Empire West
Whse/Mfg
11600 Iberia St
408,806
Home Depot
Inland Empire West
Whse/Mfg
5885 Sierra Ave
403,182
LG Electronics
Inland Empire West
Whse/Mfg
2350 Fleetwood Dr
270,570
ADESA
Inland Empire West
Whse/Mfg
5200 Shea Center Dr
244,947
Restoration Hardware
Inland Empire West
Whse/Mfg
2225 Sequoia Ave
(285,000)
Sport Chalet, Inc.
Inland Empire West
Whse/Mfg
13521 Santa Ana Ave
(423,460)
Fontana Logistics Center, Inc.
Inland Empire West
Whse/Mfg
675 E Central Ave
(480,510)
Kohler Co.
Inland Empire East
Whse/Mfg
Sports Authority
Inland Empire West
Whse/Mfg
13053 San Bernardino Ave
(616,551)
Top Transactions
Property Name
Sale Price
Sold (sf)
Buyer
Seller
Submarket
Specific Use
11260 Elm Ave
$42,192,640
434,170
States Logistics
Services, Inc.
Bridge Fontana LLC
Inland Empire West
Whse/Mfg
1080 Mount Vernon
Ave
$24,500,000
255,106
DCT
MMI Of BDI
Inland Empire East
Riverside Mt Vernon
Whse/Mfg
10220 4th St
$14,443,520
116,480
décor Ware
International, Inc.
Turner Real Estate
Investments
Whse/Mfg
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Inland Empire West
9
New Construction
Current New Construction by Submarket
8,400,000
8,220,720
8,200,000
8,000,000
7,800,000
7,600,000
7,445,552
7,400,000
7,200,000
7,000,000
Inland Empire East
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Inland Empire West
10
Industrial Advisory Board Members
Inland Empire
CBRE
Dave Consani
Jim Koenig
Colliers International
Josh Hayes
Mark Zorn
Daum Commercial
Gus Andros
Rick John
JLL
Mike McCrary
Ruben Goodsell
Lee & Associates
Michael Chavez
Majestic Realty Co
Kyle Valley
NAI Capital
Nick Chang
Newmark Grubb Knight Frank
Mark Kegans
Ron Washle
Strata Realty
Voit
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Tim Hawke
Walt Chenoweth
11
Xceligent Inland Empire Team
This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we
have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to
independently confirm its accuracy. For more information, please contact :
Matt Nelson
Director of Analytics
714-509-1404
[email protected]
Monique Ebel
Director of Research
714-538-8432
[email protected]
Sean Pullin
Director of Client Services
714-855-5801
[email protected]
Tim Hayes
Executive Director - AIR
213-687-8777
[email protected]
Produced in partnership with
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
12