Retail Resurgence in San Bernardino County

Moore: “The County works with developers and investors, is active with ICSC, and works to understand the needs and challenges of retailers.”

SAN BERNARDINO, CA—Population growth, strong demand, increasing absorption and decreasing vacancies are evidence of a robust retail sector in the San Bernardino County region of the Inland Empire. This makes it a great place for retailers to locate, CBRE ‘s senior managing director Jeff Moore tells GlobeSt.com. We spoke exclusively with Moore about the County’s retail sector. During the interview he covered the areas of the County that are performing the best as well as the categories that are expanding.  GlobeSt.com: Give us an overview of San Bernardino County from a retail perspective based on this last quarter. Moore:   We’re seeing positive fundamentals coming out of San Bernardino County: rents are increasing, absorptions are increasing, vacancies are decreasing, and there’s strong demand in the regional areas. Employment improvements have driven the market’s economy forward and allowed it to recover at a faster rate than neighboring markets. Population growth of nearly 7% has boosted the Inland Empire over the last five years and is projected to grow by an additional 5.4% by 2021. GlobeSt.com: What have been some top-performing cities and retailers in the County? Moore: The more regional areas that have some of the stronger demographics have been the best performers. On the East End of the County, Redlands stands out as a top performer with an average household income of more than $66,000 and sits in one of the Country’s strongest retail markets. In addition, the County’s West End cities of Rancho Cucamonga, Ontario, Chino Hills, Upland, Montclair and Fontana, in particular, continue to show strong fundamentals. The demographics are better, the incomes are higher, and there’s a stronger regional draw in those areas. For example the average household income for the West End cities is $65,733. As far as categories go, we’re seeing a lot of demand in the specialty grocers in particular, including a big rollout of Aldi supermarkets, Sprouts, Smart & Final Extra and Grocery Outlet . And the fitness category is also doing well—not only from LA Fitness and 24-Hour Fitness , but also from some of the smaller boutique fitness companies like Planet Fitness and Chuze Fitness . There is also continued demand from fast-casual restaurants , which is a consistent retail trend, but especially true in the County. We are seeing interest from the Habit and other pizza concepts. There’s also been continued growth and demand from discount retailers like Hobby Lobby, Marshall’s, T.J.Maxx and the dollar stores. And we’ve seen growth from indoor playgrounds, trampoline centers and other similar uses that are experiential. These uses attract customers, especially in the tertiary markets that need a destination to draw people into the shopping center. This is where you’ll see this type of use expand. It’s a different type of environment and shopping experience than the traditional one, and these experiential environments are a regional draw. GlobeSt.com: Who’s expanding and why, and/or what category is really growing/expanding right now? Moore: As Millennials get married and have children, they will start moving out into more-affordable environments where they can own a home. We’ve seen Millennials and young families move to the Inland Empire increasing its population, which in turn has attracted employers and companies due to its low cost of doing business. In terms of who is expanding, you have to go with either value or experience in the County. The restaurants are growing because the internet is not affecting food sales—people want to go out and eat, and they’re pressed for time. Specialty grocers are growing because they found a niche in the market. People want to go to Sprouts or Smart and Final because they have specific buying patterns—they still may go to a grocery store, but they’re not buying everything they need there. GlobeSt.com: Where is next best opportunity for retail growth, both from a location perspective and from a retailer/category perspective? Moore: The 210 corridor is really strong right now. There’s good income, consumer demographics and housing growth. That is driving new housing and retail development. GlobeSt.com: Anything else you would tell a retailer about considering a location in San Bernardino County? Moore: It’s a healthy retail environment. Just look at the success of Ontario Mills and Victoria Gardens. These large outlet and lifestyle centers continue to be strong retail performers. This is also a really proactive county with a very strong hands-on approach. The County works with developers and investors, is active with ICSC, and works to understand the needs and challenges of retailers. They are very proactive in discussing opportunities with retailers and helping expedite the permitting process.