ONTARIO, CA—The Inland Empire industrial market experienced robust growth throughout the first half of the year, says CBRE in a recent report.
Through the first six months of the year, the Inland Empire experienced more than 20 million square feet in gross absorption and more than 11 million square feet in net absorption, the firm says.
Tenant demand for product less than 500,000 square feet has continued to propel the market, and the continued surge in demand can be primarily attributed to tenants feeling more confident about leasing space in the region as, the economy continues on a solid footing the CBRE Marketview Q2 Inland Empire Industrial Market Report states:
The industrial market has been experiencing an increase in demand and activity in all size ranges. With a tightening market, landlords have continued to grow their asking rates. As a result, there is a greater sense of urgency, from a tenant's perspective, to get deals executed.
The emerging presence of several big box e-commerce fulfillment centers has resulted in more activity in the smaller size ranged buildings, in an effort to support the larger fulfillment centers. Overall, the market was very strong with gross activity levels soaring to 10.9 million sq. ft. in Q2 2015.
The overall average asking lease rate ended Q2 2015 at $0.41 per sq. ft. in the Inland Empire, up two cents since Q1 2015. Asking lease rates in the Inland Empire West finished Q2 2015 at $0.44 per square foot, up two cents since Q1 2015, while the Inland Empire East recorded an average asking lease rate of $0.40 per sq. ft., up two cents since Q1 2015, the report shows.
Lease rates have been ticking up for product less than 100,000 sq. ft. as available product has become scarce due to the lack of new supply and continued strong demand. For product ranging between 100,000 – 500,000 sq. ft., rates have continued to increase with newly constructed state-of-the-art buildings commanding a premium rental rate. For product 500,000 square foot. and greater, rates have remained flat, primarily due to stagnant rental growth for product ranging between 700,000-850,000 sq. ft., as tenant demand has been lower than expected. Overall, rent growth is expected to continue through the second half of the year, CBRE says.
Click CBRE report to see the full report.
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David Phillips
David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.
