Inland Empire Industrial
www.cbre.com/research
Second Quarter 2011
0.4
7%
0.35
6%
0.3
5%
0.25
4%
0.2
3%
0.15
2%
0.1
1%
0.05
0%
0
Q211
8%
Q111
0.45
Q410
9%
Q310
0.5
Q210
• There is still a significant amount of
investment capital seeking core, net
leased and value add industrial assets in
the Inland Empire.
6.3%
$0.33
10%
Q110
• Construction activity is starting to pick up
with 1.3 million square feet of speculative
development currently under construction
in the Inland Empire East.
Vacancy Rate
Avg. Asking Lease Rate
Vacancy Rate vs. Lease Rate
Q409
• Both the overall vacancy and availability
rates have decreased from last quarter.
Vacancy dropped from 6.4% to 6.3% and
the availability rate declined from 12.8%
to now stand at 12.2%.
There is still a significant amount of investment capital seeking
core, net-leased and value-add industrial assets in the Inland
Empire. Cap rates for net leased, credit tenant assets moved
down below 6%.
Q309
• The Inland Empire produced 6.2 million
square feet of gross activity bringing
the year-to-date total to 14.3 million
square feet.
Statistics through the month of May show that port activity has
increased year-over-year at the Ports of Los Angeles and Long
Beach. Imports are up nearly 6% at the Port of Los Angeles
compared to May of last year. Overall, the Port of Los Angeles
moved 692,933 twenty-foot equivalent container units (TEUs)
in the month of May compared to 689,421 in May of 2010.
Import activity has increased 4% at the Port of Long Beach
year-over-year. In total, the Port of Long Beach moved nearly
12,000 more TEUs than May of 2010. The Los Angeles County
Economic Development Corporation is expecting movement at
the ports to continue to grow this year and well into 2012.
Q209
• With the second quarter generating
2.7 million square feet of positive net
absorption the year-to-date total now
equals 5.9 million square feet.
Speculative development is beginning to pick up in the Inland
Empire with 1.3 million square feet currently under construction.
TA Realty Advisors broke ground on a 697,578 square-foot
building in Perris and Watson Land Company is completing a
616,542 square-foot building in Redlands. In addition, Carson
plans to break ground on a 400,000 square-foot building in
Chino. Other developers such as Hillwood, CatStrs and ProLogis
are contemplating breaking ground in the Inland Empire West
as well.
Q109
Hot Topics
The Inland Empire’s availability rate dropped from 12.8%
last quarter to currently stand at 12.2%. Partially due to the
increased activity, the Inland Empire East’s availability rate
dropped quarter-over-quarter from 14.9% to 13.1% while
the West experienced a slight increase from 11.5% to 11.7%.
Approximately 3.8 million square feet of new available product
came onto the market in the Inland Empire West this quarter
contributing to the rise in the availability rate. The vacancy rate
in the Inland Empire dropped minimally from 6.4% last quarter
to 6.3% this quarter. Vacancy in the East declined from 8.3%
to 7.6% while vacancy in the West slightly increased from
5.2% to now stand at 5.5%. Overall, user activity for space less
than 100,000 square feet is beginning to pick up. Of the 77
deals made this quarter, 60 were below 100,000 square feet,
30 of which occurred in space 10,000 – 19,999 square feet.
Q408
* The arrows are trend indicators over the
specified time period and do not represent a
positive or negative value. (e.g., absorption could
be negative, but still represent a positive trend
over a specified period.)
Q308
520,000
Q208
Completed
Construction
Q108
2.7 MSF
Q407
Net Absorption*
Q307
$0.33
Q207
Lease Rates
Q107
6.3%
Qtr.
Q406
Vacancy
Yr.
Q306
Change from last
Current
The 2011 year-to-date gross absorption now equals 14.3
million square feet with the second quarter contributing
6.2 million square feet to the total. The Inland Empire East
generated a healthy amount of activity with 3.3 million square
feet. Razor Corporation leased a 599,654 square-foot building
in Rialto which helped boost activity in the East submarket
this quarter. Other notable deals that occurred in the East End
include a 449,040 square-foot building sold to Ross Stores in
Riverside and a 409,802 square-foot building leased to Hand
Express in Corona. The Inland Empire West brought in 2.9
million square feet of gross activity this quarter which includes
the sale of a 402,539 square-foot building to Anna’s Linens in
Fontana. Overall, gross activity in the Inland Empire is down 1.9
million square feet year-over-year. However, the year-to-date
net absorption is on par with the second quarter of 2010 at 5.9
million square feet. The Inland Empire generated 2.7 million
square feet of positive net absorption this quarter. The Inland
Empire East brought in1.5 million square feet of net absorption
representing a year-over-year increase of 708,695 square feet
while the Inland Empire West contributed the remaining 1.2
million square feet to the total net absorption.
Q206
Quick Stats
© 2011, CB Richard Ellis, Inc.
Market Statistics
Vacancy
Rate %
2Q 2011 Net
Absorption SF
Under
Construction SF
Inland Empire East
152,659,457
7.6%
1,529,161
1,325,472
$0.33
13.1%
Inland Empire West
242,556,762
5.5%
1,169,667
0
$0.34
11.7%
Market Total
395,216,219
6.3%
2,698,828
1,325,472
$0.33
12.2%
Inland Empire
California
United States
Unemployment
13.2%
11.7%
9.1%
Average Asking
Lease Rate
Availability
Rate %
Inland Empire Industrial
Rentable
Area
Submarket
The unemployment rate in the Inland Empire was 13.2% in May, down
from a revised 13.4% in April. This compares with an unemployment
rate of 11.7% for California and 9.1% for the United States during the
same period. The unemployment rate was 13.3% in Riverside County
and 13.2% in San Bernardino County.
16.0%
14.0%
12.0%
Between April and May total nonfarm employment decreased by 1,900
to reach 1,108,800 jobs. Despite this decline, Manufacturing reported a
month-over gain with the addition of 1,000 jobs. Durable goods accounted
for all of the job growth in this sector, up 1,100 jobs while non-durable
goods declined 100 jobs.
10.0%
8.0%
6.0%
4.0%
2.0%
2Q10
3Q10
4Q10
1Q11
Vacancy
Availability
Vacancy & Availability Rate
2Q11
6.3%
12.2%
The overall vacancy rate dropped from 6.4% to 6.3% quarter-over-quarter.
The Inland Empire East submarket experienced a decline in vacancy this quarter
dropping from 8.3% to the current rate of 7.6% while the Inland Empire West
submarket increased slightly from 5.2% to 5.5%.
18%
16%
14%
12%
The Inland Empire’s availability rate also experienced a quarter-over-quarter
decline, decreasing from 12.8% to 12.2%. The Inland Empire East’s
availability rate is now 13.1% which is the lowest level it has been since the
third quarter of 2007. The West end minimally increased from last quarter’s
rate of 11.5% to now stand at 11.7%.
10%
8%
6%
4%
2%
0%
Q310
Q410
Q111
Q211
Page 2
© 2011, CB Richard Ellis, Inc.
Second Quarter 2011
Q210
Net Absorption & Gross Activity
Net Absorption
Gross Activity
2,698,828
6,150,074
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
Q210
Q310
Q410
Lease Rate
Q111
2Q11
Q211
The year-to-date gross activity now equals 14.3 million square feet with the
second quarter adding 6.2 million square feet to the total. The Inland Empire
East made up the majority of the total bringing in 3.3 million square feet
of gross activity this quarter while the Inland Empire West ended the quarter
with 2.9 million square feet.
Inland Empire Industrial
The Inland Empire generated 2.7 million square feet of positive net absorption
this quarter bringing the year-to-date total to 5.9 million square feet. The
Inland Empire East contributed 1.5 million square feet to the total, indicating
a 708,165 square foot increase year-over-year. The West end made up the
remaining 1.2 million square feet to the quarter’s total.
10,000,000
$0.33
The overall asking lease rate continues to remain at $0.33 triple net for the
fourth consecutive quarter. The Inland Empire East dropped from $0.34 triple
net to $0.33 triple net while the Inland Empire West experienced a quarterover-quarter increase of $0.01 to now stand at $0.34 triple net.
$0.35
$0.34
$0.33
$0.32
$0.31
$0.30
Q210
Q310
Construction Activity
Q410
Q111
Under Construction
Completed Construction
Q211
1,325,472
520,000
Due to the lack of supply for buildings greater than 500,000 square feet
speculative development is starting to pick up. There are currently three
speculative buildings under construction in the Inland Empire East totaling
1.3 million square feet. This quarter’s completed construction consists of one
build-to-suit in Riverside totaling 520,000 square feet.
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
Q210
Q310
Q410
Q111
Q211
© 2011, CB Richard Ellis, Inc.
Second Quarter 2011
Page 3
Inland Empire Industrial
Top Lease Transactions
Size (Sq. Ft.)
Tenant
Submarket
Deal Type
844,150
Smuckers
Inland Empire East
Exp./
Renewal
599,654
Razor
Inland Empire East
New
409,802
Hand Express, LLC
Inland Empire East
New
408,252
Distribution Alternative
Inland Empire West
New
Inland
Empire,
Submarket
Map CA
LOS
LOS ANGELES
ANGELES
COUNTY
COUNTY
Office Submarkets
San
Bernardino
National
Forest
San
SanBernardino
Bernardino
BernardinoNational
National
NationalForest
Forest
Forest
San
San
Bernardino
National
San
Bernardino
National
Forest
BERNARDINO
SAN
SAN BERNARDINO
COUNTY
COUNTY
La Verne
Verne
La
Upland Rancho
Upland
Rancho Cucamonga
Cucamonga
Claremont
Claremont
Fontana
Fontana
Pomona
Pomona
Completions
Rentable Building Area completed during the
period
Highland
Highland
Rialto
Rialto
San
San
Bernardino
Bernardino
West End
End
West
Ontario
Ontario
Colton
Colton
Glen Avon
Avon
Glen
Chino
Chino
Pedley
Pedley
Rubidoux
Rubidoux
Mira Loma
Loma
Mira
Grand
Grand
Terrace
Terrace
Loma Linda
Loma
Linda
Mentone
Mentone
Redlands
Redlands
Yucaipa
Yucaipa
East End
End
East
Calimesa
Calimesa
Chino Hills
Hills
Chino
Riverside
Riverside
Chino
Chino
ChinoHills
Hills
Hills
Hills
Chino
Chino
Hills
Chino
Hills
State
Park
StatePark
Park
State
Park
State
State
Park
Norco
Norco
Moreno
Moreno
Valley
Valley
Corona
Corona
ORANGE
ORANGE
COUNTY
COUNTY
RIVERSIDE
RIVERSIDE
COUNTY
COUNTY
Cleveland
Cleveland
ClevelandNational
National
National
National
Cleveland
Cleveland
Cleveland
National
National
Forest
Forest
Forest
Forest
Forest
Perris
Perris
0
2.5
Miles
5
This map contains information from sources we believe to be reliable, but we make no representation, warranty or guaranty of its accuracy.
This map is published for the use of CBRE and its clients only. Redistribution in whole or part to any third party without the prior written consent of CBRE is strictly prohibited.
© 2007 CB Richard Ellis, All Rights Reserved. Sources: CBRE Mapping Services (877) 580-4674; Claritas, Inc./GDT, Inc. MapFiles\Work2007\127625.wor 1/26/2007
Inland Empire Submarket Descriptions
EAST END
Includes Colton, Corona, Loma Linda, Moreno Valley, Perris, Redlands,
Rialto, Riverside, and San Bernardino
WEST END
Includes Chino, Fontana, Mira Loma, Ontario, and
Rancho Cucamonga
Local Offices
Anaheim/Mid-Counties
2125 E. Katella Avenue, Suite 100
Anaheim, California 92806
714.939.2100
Antelope Valley
42220 10th Street West, Suite 107
Lancaster, California 93534
661.729.6702
Beverly Hills
1840 Century Park East
Los Angeles, California 90067
310.550.2500
El Segundo
2041 Rosecrans Avenue, Suite 300
El Segundo, California 90245
310-765-2600
LA-Central
500 Citadel Drive, Suite 301
Commerce, California 90040
323.838.3100
Los Angeles Downtown
355 South Grand Avenue, Suite 3100
Los Angeles, California 90071
213.613.3242
LA North - Glendale/San
Fernando
10 Universal City Plaza, 27th Floor
Universal City, California 91608
818.907.4677
Newport Beach
3501 Jamboree Road, Suite 100
Newport Beach, California 92660
949.725.8500
Ontario
4141 Inland Empire Boulevard, Suite 100
Ontario, California 91764
909.418.2000
Palm Desert
74-770 Highway 111, Suite 101
Indian Wells, California 92210
760.341.5273
San Diego Central
4365 Executive Drive, Suite 900
San Diego, California 92121
858.546.4600
San Diego Downtown
350 Tenth Avenue, Suite 800
San Diego, California 92101
619.236.1231
San Diego North County
5740 Fleet Drive, Suite 100
Carlsbad, California 92008
760.438.8500
Santa Barbara
1332 Anacapa Street
Santa Barbara, California 93101
805.963.6100
Market Coverage
Includes all competitive industrial buildings
10,000 square feet and greater in size.
Net Absorption
The change in Occupied Sq. Ft. during the period
for all Existing properties
Base Inventory, Base or Building Square Feet
The sum of the Rentable Building Area for all
competitive properties
Yorba Linda
Linda
Yorba
Anaheim
Anaheim
Asking Lease Rate
Average of Asking Lease Rates for each property
weighted by the associated Available Space.
Includes Direct Available Space unless otherwise
indicated
Santa Fe Springs
10350 Heritage Park Drive
Santa Fe Springs, California 90670
562.946.1541
South Bay/Mid-Counties
990 West 190th Street
Torrance, California 90502
310.516.2300
Temecula
27720 Jefferson Avenue, Suite 230
Jefferson Plaza Office Building
Temecula, California 92590
951.326.2900
Ventura County
771 East Daily Drive, Suite 300
Camarillo, California 93010
805.465.1600
© 2011 CB Richard Ellis, Inc. CB Richard Ellis statistics contained herein may represent a different data set
than that used to generate National Vacancy and Availability Index statistics published by CB Richard Ellis’
Corporate Communications Department or CB Richard Ellis’ research and econometric forecasting unit, CB
Richard Ellis—Econometric Advisors. Information herein 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 and completeness. Any projections,
opinions, assumptions or estimates used are for example only and do not represent the current or future
performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and
cannot be reproduced without prior written permission of CB Richard Ellis.
Occupied Square Feet
Rentable Building Area less Vacant Space
Under Construction
Buildings that have begun construction as
evidenced by site excavation or foundation work,
and is on-going
Available Space
Space being marketed to potential occupants, in
Rentable Sq. Ft. (direct and sublease combined,
unless otherwise indicated)
Availability Rate
Available space as a percentage of the Base
Inventory or Building Sq. Ft
Vacant Space
Available Space that is physically vacant, in
Rentable Sq. Ft
Vacancy Rate
Vacant space as a percentage of the Base
Inventory or Building Sq. Ft
For more information regarding the
MarketView, please contact:
Jill Luna, Research Manager
CB Richard Ellis
4141 Inland Empire Blvd., Suite 100, Ontario, CA
T 909.418.2041 F 909.418.2100
[email protected]