Inland Empire Industrial Market Outlook 1Q 2018
The Inland Empire, one of the nation’s most dynamic industrial markets,
thrived in the first quarter of 2018. Asking rent climbed due to strong demand.
The 1Q 2018 average asking rent reached $0.60/SF, up 4.5% over 4Q 2017
and 20.0% over the year. The 5.4% vacancy rate was steady over the quarter
and rose 20 basis points from last year due to 6.1 million SF of deliveries.
Construction volume showed no signs of slowing down with approximately
35.0% of the 21.4 million SF preleased. A robust economy drove demand for
industrial space as demonstrated by increasing cargo volume from the ports
of Los Angeles and Long Beach, which handle roughly 32% of the nation’s
cargo imports. The first two months of the year saw no slowdown in port
activity, a notable occurrence as cargo volume historically declines due to the
Lunar New Year when many Chinese businesses and factories shut down for
the extended holiday. Instead, combined cargo volume increased 12.7% over
the year to more than 2.8 million TEUs and imports jumped 14.6%. Consumer
demand for imported goods supported cargo volume increases, which
augmented demand for distribution space in the Inland Empire, particularly
among those involved in the e-commerce sector including Amazon, 3PLs,
and shipping companies such as UPS.