San Bernardino has one of the fastest growing retail markets in the State of California. Last year, the retail market in San Bernardino grew 3.6%, compared to the state growth rate of 2.4%. This was the second-fastest growth rate in the state. At the end of 2018, the retail market vacancy rate fell to 6.6%, the first time the rate has fallen below 7% since the Great Recession. Population and housing growth has been a catalyst for the retail leasing activity in the market. Generally, retail activity is part of a larger growth story.
“In 2017, the county on net saw roughly 25,000 new residents settle into the region,” Reg Javier, deputy executive officer of workforce and economic development in San Bernardino County, tells GlobeSt.com. “The steady growth of San Bernardino County's population has made the county a market leader as it outpaces many other parts of the state where population growth is lagging. That growth fuels housing demand. Moreover the county is an affordable housing haven. Economists note that home prices in San Bernardino County are 60% less than in neighboring Orange County and 50% less than in neighboring Los Angeles County.”
The housing market has been an important part of the retail activity. Population growth in San Bernardino has fueled housing sales, and retailers have followed. Now, the population growth is fueling housing development. “More than 100,000 housing units are planned in San Bernardino County,” says Javier. “As neighborhoods expand, retailers, developers and investors take notice and continue to choose the County for expansion and to launch new brands. Another driver is tourism spending. The County accounted for $4.9 billion in visitor spending in 2018, a 53% increase since 2003.”
New retailers have been responding to the population and housing growth. Cracker Barrel, Cardenas, Chuze Fitness, Bob's Discount Furniture, EOS Fitness and 99 Ranch Market increased their presence in the market in 2018. Along with new retailers, new capital has also entered the market. Specifically, institutional capital has become more active. “New institutional capital entering the market proves that San Bernardino County is a solid investment option worth looking at—especially for investors who desire a little higher yield than they would find in the surrounding markets of Los Angeles, Orange, and San Diego counties,” says Javier. “Investors such as International Properties Holding's acquisition of the Target and Big Lots!-anchored San Bernardino Center in San Bernardino for $14 million and AEW's $50 million acquisition of Sycamore Hills Plaza, a 77,690-square-foot retail center in Upland, anchored by 365 by Whole Foods, CVS with a Chipotle, Union Bank and Orange Theory are indicative of that trend.”
In 2019, expect more of the same activity in San Bernardino. Javier forecasts the foray of more new retailers this year. “The retail landscape continues to be trending with diverse and forward-thinking tenant offerings,” he says. “Strong population growth will drive the activity of retailers—with more people living and working in San Bernardino County we will continue to see retailers invest there. We expect the retail growth in San Bernardino County to continue at a healthy pace in 2019 making it one of the premiere markets for opportunity in Southern California.”
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Kelsi Maree Borland
