www.cbre.com/research Second Quarter 2011 Inland Empire Industrial © 2011, CB Richard Ellis, Inc. 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. 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. 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. 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. 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%. Quick Stats Change from last Current Yr. Qtr. Vacancy 6.3% Lease Rates $0.33 Net Absorption* 2.7 MSF Completed Construction 520,000 * 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.) Hot Topics • 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. • The Inland Empire produced 6.2 million square feet of gross activity bringing the year-to-date total to 14.3 million square feet. • 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%. • Construction activity is starting to pick up with 1.3 million square feet of speculative development currently under construction in the Inland Empire East. • There is still a significant amount of investment capital seeking core, net leased and value add industrial assets in the Inland Empire. Vacancy Rate vs. Lease Rate Vacancy Rate 6.3% Avg. Asking Lease Rate $0.33 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211
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www.cbre.com/research Second Quarter 2011
Inland Empire Industrial
© 2011, CB Richard Ellis, Inc.
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.
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.
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.
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.
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%.
Quick Stats
Change from last
Current Yr. Qtr.
Vacancy 6.3%
Lease Rates $0.33
Net Absorption* 2.7 MSF
Completed Construction
520,000
* 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.)
Hot Topics
• 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.
• The Inland Empire produced 6.2 million square feet of gross activity bringing the year-to-date total to 14.3 million square feet.
• 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%.
• Construction activity is starting to pick up with 1.3 million square feet of speculative development currently under construction in the Inland Empire East.
• There is still a significant amount of investment capital seeking core, net leased and value add industrial assets in the Inland Empire.
Vacancy Rate vs. Lease Rate Vacancy Rate 6.3%Avg. Asking Lease Rate $0.33
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Market Statistics
SubmarketRentable
AreaVacancy Rate %
2Q 2011 Net Absorption SF
Under Construction SF
Average Asking Lease Rate
AvailabilityRate %
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%
UnemploymentInland Empire 13.2%
California 11.7%United States 9.1%
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.
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.
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%.
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%.
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Vacancy & Availability Rate Vacancy 6.3%Availability 12.2%
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14.0%
16.0%
2Q10 3Q10 4Q10 1Q11 2Q11
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Net Absorption & Gross Activity Net Absorption 2,698,828Gross Activity 6,150,074
Lease Rate 2Q11 $0.33
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.
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.
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.
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 quarter-over-quarter increase of $0.01 to now stand at $0.34 triple net.
Construction Activity Under Construction 1,325,472Completed Construction 520,000
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© 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.
For more information regarding the MarketView, please contact: Jill Luna, Research ManagerCB Richard Ellis 4141 Inland Empire Blvd., Suite 100, Ontario, CA T 909.418.2041 F 909.418.2100 [email protected]
Inland Empire Industrial
Asking Lease RateAverage of Asking Lease Rates for each property weighted by the associated Available Space. Includes Direct Available Space unless otherwise indicated
CompletionsRentable Building Area completed during the period
Market CoverageIncludes all competitive industrial buildings 10,000 square feet and greater in size.
Net AbsorptionThe change in Occupied Sq. Ft. during the period for all Existing properties
Base Inventory, Base or Building Square FeetThe sum of the Rentable Building Area for all competitive properties
Occupied Square FeetRentable Building Area less Vacant Space
Under ConstructionBuildings that have begun construction as evidenced by site excavation or foundation work, and is on-going
Available SpaceSpace being marketed to potential occupants, in Rentable Sq. Ft. (direct and sublease combined, unless otherwise indicated)
Availability RateAvailable space as a percentage of the Base Inventory or Building Sq. Ft
Vacant SpaceAvailable Space that is physically vacant, in Rentable Sq. Ft
Vacancy RateVacant space as a percentage of the Base Inventory or Building Sq. Ft
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
Submarket Map
Inland Empire Submarket Descriptions
La VerneLa VerneLa VerneLa VerneLa VerneLa VerneLa VerneLa VerneLa Verne
ClaremontClaremontClaremontClaremontClaremontClaremontClaremontClaremontClaremont
PomonaPomonaPomonaPomonaPomonaPomonaPomonaPomonaPomona
Yorba LindaYorba LindaYorba LindaYorba LindaYorba LindaYorba LindaYorba LindaYorba LindaYorba Linda
AnaheimAnaheimAnaheimAnaheimAnaheimAnaheimAnaheimAnaheimAnaheim
HighlandHighlandHighlandHighlandHighlandHighlandHighlandHighlandHighland
MentoneMentoneMentoneMentoneMentoneMentoneMentoneMentoneMentone
CalimesaCalimesaCalimesaCalimesaCalimesaCalimesaCalimesaCalimesaCalimesa
YucaipaYucaipaYucaipaYucaipaYucaipaYucaipaYucaipaYucaipaYucaipa
PerrisPerrisPerrisPerrisPerrisPerrisPerrisPerrisPerris
Glen AvonGlen AvonGlen AvonGlen AvonGlen AvonGlen AvonGlen AvonGlen AvonGlen Avon
PedleyPedleyPedleyPedleyPedleyPedleyPedleyPedleyPedley RubidouxRubidouxRubidouxRubidouxRubidouxRubidouxRubidouxRubidouxRubidouxMira LomaMira LomaMira LomaMira LomaMira LomaMira LomaMira LomaMira LomaMira Loma
Rancho CucamongaRancho CucamongaRancho CucamongaRancho CucamongaRancho CucamongaRancho CucamongaRancho CucamongaRancho CucamongaRancho CucamongaUplandUplandUplandUplandUplandUplandUplandUplandUpland
Chino HillsChino HillsChino HillsChino HillsChino HillsChino HillsChino HillsChino HillsChino Hills
ChinoChinoChinoChinoChinoChinoChinoChinoChino
OntarioOntarioOntarioOntarioOntarioOntarioOntarioOntarioOntario
FontanaFontanaFontanaFontanaFontanaFontanaFontanaFontanaFontana RialtoRialtoRialtoRialtoRialtoRialtoRialtoRialtoRialto
MorenoMorenoMorenoMorenoMorenoMorenoMorenoMorenoMorenoValleyValleyValleyValleyValleyValleyValleyValleyValley
RiversideRiversideRiversideRiversideRiversideRiversideRiversideRiversideRiverside
GrandGrandGrandGrandGrandGrandGrandGrandGrandTerraceTerraceTerraceTerraceTerraceTerraceTerraceTerraceTerrace
SanSanSanSanSanSanSanSanSanBernardinoBernardinoBernardinoBernardinoBernardinoBernardinoBernardinoBernardinoBernardino
Loma LindaLoma LindaLoma LindaLoma LindaLoma LindaLoma LindaLoma LindaLoma LindaLoma LindaRedlandsRedlandsRedlandsRedlandsRedlandsRedlandsRedlandsRedlandsRedlands
NorcoNorcoNorcoNorcoNorcoNorcoNorcoNorcoNorco
ColtonColtonColtonColtonColtonColtonColtonColtonColton
CoronaCoronaCoronaCoronaCoronaCoronaCoronaCoronaCorona
Cleveland NationalCleveland NationalCleveland NationalCleveland NationalCleveland NationalCleveland NationalCleveland NationalCleveland NationalCleveland NationalForestForestForestForestForestForestForestForestForest
San Bernardino National ForestSan Bernardino National ForestSan Bernardino National ForestSan Bernardino National ForestSan Bernardino National ForestSan Bernardino National ForestSan Bernardino National ForestSan Bernardino National ForestSan Bernardino National Forest
Chino HillsChino HillsChino HillsChino HillsChino HillsChino HillsChino HillsChino HillsChino HillsState ParkState ParkState ParkState ParkState ParkState ParkState ParkState ParkState Park
ORANGEORANGEORANGEORANGEORANGEORANGEORANGEORANGEORANGECOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTY RIVERSIDERIVERSIDERIVERSIDERIVERSIDERIVERSIDERIVERSIDERIVERSIDERIVERSIDERIVERSIDE
COUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTY
LOS ANGELESLOS ANGELESLOS ANGELESLOS ANGELESLOS ANGELESLOS ANGELESLOS ANGELESLOS ANGELESLOS ANGELESCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTY SAN BERNARDINOSAN BERNARDINOSAN BERNARDINOSAN BERNARDINOSAN BERNARDINOSAN BERNARDINOSAN BERNARDINOSAN BERNARDINOSAN BERNARDINO
COUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTYCOUNTY
West EndWest EndWest EndWest EndWest EndWest EndWest EndWest EndWest End
East EndEast EndEast EndEast EndEast EndEast EndEast EndEast EndEast End
Inland Empire, CA Office Submarkets
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
0
M i l e s
52 . 5
EAST ENDIncludes Colton, Corona, Loma Linda, Moreno Valley, Perris, Redlands, Rialto, Riverside, and San Bernardino
WEST ENDIncludes Chino, Fontana, Mira Loma, Ontario, and Rancho Cucamonga
Local OfficesAnaheim/Mid-Counties2125 E. Katella Avenue, Suite 100 Anaheim, California 92806 714.939.2100Antelope Valley 42220 10th Street West, Suite 107 Lancaster, California 93534 661.729.6702Beverly Hills1840 Century Park East Los Angeles, California 90067 310.550.2500El Segundo 2041 Rosecrans Avenue, Suite 300 El Segundo, California 90245 310-765-2600LA-Central 500 Citadel Drive, Suite 301 Commerce, California 90040 323.838.3100
Los Angeles Downtown355 South Grand Avenue, Suite 3100 Los Angeles, California 90071 213.613.3242LA North - Glendale/San Fernando 10 Universal City Plaza, 27th Floor Universal City, California 91608818.907.4677Newport Beach3501 Jamboree Road, Suite 100 Newport Beach, California 92660949.725.8500Ontario4141 Inland Empire Boulevard, Suite 100 Ontario, California 91764 909.418.2000
Palm Desert74-770 Highway 111, Suite 101 Indian Wells, California 92210 760.341.5273San Diego Central4365 Executive Drive, Suite 900 San Diego, California 92121 858.546.4600San Diego Downtown350 Tenth Avenue, Suite 800 San Diego, California 92101 619.236.1231San Diego North County5740 Fleet Drive, Suite 100Carlsbad, California 92008 760.438.8500Santa Barbara1332 Anacapa Street Santa Barbara, California 93101 805.963.6100
Santa Fe Springs 10350 Heritage Park Drive Santa Fe Springs, California 90670 562.946.1541South Bay/Mid-Counties990 West 190th Street Torrance, California 90502 310.516.2300Temecula27720 Jefferson Avenue, Suite 230 Jefferson Plaza Office Building Temecula, California 92590 951.326.2900Ventura County 771 East Daily Drive, Suite 300 Camarillo, California 93010 805.465.1600
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