First Quarter 2017 / Office Market Report Inland Empire · Market Overview . First Quarter 2017 /...
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Partnership. Performance. avisonyoung.com Market Overview First Quarter 2017 / Office Market Report Inland Empire Market Facts 5.3% Inland Empire Unemployment Rate 284,985 SF Positive Net Absorption Current Quarter 11.0% Total Vacancy Rate Down From 11.8% In Q4 2016 $1.85 PSF Asking Rental Rate Weighted Average Transaction Volume by Property Sector 4% 36% 16% 31% 13% Office Industrial Retail Multi‐Family Land 11.00% 14.00% 17.00% 20.00% $1.60 $1.70 $1.80 $1.90 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 0 200,000 400,000 600,000 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 Asking Rent Vacancy Rates Net Absorption Demand for office space in the Inland Empire remains steady at the start of the New Year of 2017. Vacancy has decreased year-over-year post-recession, while rental rates have gradually been bolstered by increasing demand in the same time frame. 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. 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. Office inventory will likely grow further out of a response to the market’s massive industrial inventory, and the multifamily inventory boom and retail expansion that has followed in natural progression. Construction deliveries of office inventory are far off from pre-recession levels, and the market has extensive room to grow. As of the first quarter of 2017, vacancy in the Inland Empire’s office market decreased to 11.0%, down from the previous quarter at 11.8%, and markedly down from the same time in the previous year at 12.4%. On a year-over-year basis, vacancy has decreased significantly since recession highs of 20%, when construction activity had reached record levels. Developers are proceeding with cautious optimism, with a modest up-tick in construction activity over the past year. Rental rates in the market have been responding to the slow contraction in availability with a matched pacing. First quarter rents averaged $1.85 psf FSG, down from the previous quarter at $1.90 psf FSG, yet up from the same time in the previous year at $1.83 psf FSG. Total net absorption reached positive 284,985 sf for the quarter, and positive 661,779 sf for the most recent 12 month period.
Transcript of First Quarter 2017 / Office Market Report Inland Empire · Market Overview . First Quarter 2017 /...
Partnership. Performance. avisonyoung.com
Market Overview
First Quarter 2017 / Office Market Report
Inland Empire
Market Facts
5.3%Inland Empire
Unemployment Rate
284,985 SFPositive Net Absorption
Current Quarter
11.0%Total Vacancy Rate
Down From 11.8% In Q4 2016
$1.85 PSFAsking Rental RateWeighted Average
Transaction Volume by Property Sector
4%
36%
16%
31%
13%
OfficeIndustrialRetailMulti‐FamilyLand
11.00%
14.00%
17.00%
20.00%
$1.60
$1.70
$1.80
$1.90
2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1
0
200,000
400,000
600,000
2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1
Asking Rent Vacancy Rates Net Absorption
Demand for office space in the Inland Empire remains steady at the start of the New Year of 2017. Vacancy has decreased year-over-year post-recession, while rental rates have gradually been bolstered by increasing demand in the same time frame. 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.
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. Office inventory will likely grow further out of a response to the market’s massive industrial inventory, and the multifamily inventory boom and retail expansion that has followed in natural progression. Construction deliveries of office inventory are far off from pre-recession levels, and the market has extensive room to grow.
As of the first quarter of 2017, vacancy in the Inland Empire’s office market decreased to 11.0%, down from the previous quarter at 11.8%, and markedly down from the same time in the previous year at 12.4%. On a year-over-year basis, vacancy has decreased significantly since recession highs of 20%, when construction activity had reached record levels. Developers are proceeding with cautious optimism, with a modest up-tick in construction activity over the past year. Rental rates in the market have been responding to the slow contraction in availability with a matched pacing. First quarter rents averaged $1.85 psf FSG, down from the previous quarter at $1.90 psf FSG, yet up from the same time in the previous year at $1.83 psf FSG. Total net absorption reached positive 284,985 sf for the quarter, and positive 661,779 sf for the most recent 12 month period.
Amber Jagers
Line
Amber Jagers
Line
Partnership. Performance. avisonyoung.com
First Quarter 2017 / Office Market Report Inland Empire
South Riverside North Riverside Coachella ValleyWest San Bernardino East San Bernardino High Desert San Bernardino
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
$1.00
$1.30
$1.60
$1.90
$2.20
$2.50
2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q10.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1
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
Q4 2016 Rental Rates
Qtr/Qtr Change (%)
Current Quarter Deliveries
Under Construction Quarter-End
South RiversideTemecula / Murrieta / Lake Elsinore 4,001,756 421,582 10.50% 10.20% -12,529 -12,529 $1.89 $2.09 -9.57% 0 25,000
Perris / Menifee 268,998 6,054 2.30% 2.70% 1,182 1,182 $2.13 $2.20 -3.18% 0 94,080
Hemet 312,621 91,875 29.40% 32.50% 9,763 9,763 $1.73 $1.72 0.58% 0 0
South Riverside TOTAL 4,583,375 519,511 11.30% 11.30% -1,584 -1,584 $1.87 $2.01 -6.97% 0 119,080
North RiversideCorona 2,541,944 257,273 10.10% 9.40% -17,701 -17,701 $2.08 $1.99 4.52% 0 279,104
Riverside City 5,211,321 514,460 9.90% 10.20% 14,998 14,998 $2.05 $2.19 -6.39% 0 0
Moreno Valley 1,475,970 114,601 7.80% 8.40% 9,585 9,585 $2.13 $2.17 -1.84% 0 0
Beaumont / Banning 137,332 0 0.00% 0.00% 0 0 $0.00 $0.00 0.00% 0 0
West Riverside TOTAL 9,366,567 886,334 9.40% 9.50% 6,882 6,882 $2.07 $2.13 -2.82% 0 279,104
Coachella ValleyIndio / Coachella 243,465 39,962 16.40% 16.40% 0 0 $1.50 $1.50 0.00% 0 0
Palm Desert / Palm Springs 2,612,633 316,703 12.10% 13.40% 34,171 34,171 $1.80 $1.81 -0.55% 0 83,576
Coachella Valley TOTAL 2,856,098 356,665 12.50% 13.70% 34,171 34,171 $1.76 $1.77 -0.56% 0 83,576
West San BernardinoChino 581,779 100,679 17.30% 17.70% 2,539 2,539 $2.22 $2.32 -4.31% 0 38,500
Airport Area 7,296,390 674,935 9.30% 11.20% 139,576 139,576 $1.89 $1.86 1.61% 0 0
West San Bernardino TOTAL 7,878,169 775,614 9.80% 11.60% 142,115 142,115 $1.92 $1.90 1.05% 0 38,500
East San BernardinoSan Bernardino City / Redlands 7,693,252 973,371 12.70% 13.50% 64,508 64,508 $1.64 $1.65 -0.61% 0 0
Fontana / Rialto 743,217 188,863 25.40% 28.40% 21,928 21,928 $1.57 $1.95 -19.49% 0 0
East San Bernardino TOTAL 8,436,469 1,162,234 13.80% 14.80% 86,436 86,436 $1.63 $1.68 -2.98% 0 0
High Desert San BernardinoVictorville/Hesperia/Adelanto 1,079,054 56,214 5.20% 6.50% 13,685 13,685 $1.76 $1.85 -4.86% 0 0
Barstow 55,217 9,699 17.60% 6.50% 2,000 2,000 $0.70 $0.70 0.00% 0 0
North San Bernardino TOTAL 1,134,271 65,913 5.80% 7.20% 15,685 15,685 $1.56 $1.62 -3.70% 0 0
INLAND EMPIREClass A 8,615,817 819,066 9.50% 10.90% 118,793 118,793 $2.18 $2.17 0.46% 0 Bldgs 2 Bldgs
Class B 21,347,981 2,663,797 12.48% 12.70% 119,740 119,740 $1.78 $1.83 -2.73% 0 Bldgs 8 Bldgs
Class C 4,291,150 283,408 6.60% 7.70% 46,452 46,452 $1.36 $1.48 -8.11% 0 Bldgs 0 Bldgs
TOTAL 34,254,949 3,766,271 11.00% 11.80% 283,705 283,705 $1.85 $1.90 -2.63% 0 (SF) 520,260 (SF)
Vacancy Net Absorption Avg. Advertised Rates (FSG) 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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