GlobeSt.com Exclusive: Vacancy Rates Expected to Remain Stable in 2015
Vacancy Rates Expected to Remain Stable in 2015
By Natalie Dolce | Inland Empire | GlobeSt.com
Demand for distribution buildings continues to outpace new supply due to increased port activity and ongoing consumer confidence, says Illsley.
RIVERSIDE, CA—GlobeSt.com received an exclusive sneak peak at Lee & Associates’ fourth quarter 2014 Industrial Market Summary for manufacturing/distribution buildings for the East Valley Market in Southern California’s Inland Empire, snowing that even with a lack of inventory, the fourth quarter still posted strong activity and gross absorption. “Absorption in 2014 of 11.4 million square feet was below the figures seen in 2013 at 14.8 million square feet, but still represented a substantial amount of absorption for the marketplace,” the firm says.
The report also found that gross activity in the fourth quarter was 4.3 million square feet, with investment purchases and lease renewals accounting for 44.0% of the total. Demand for distribution buildings continues to outpace new supply due to increased port activity and ongoing consumer confidence. David Illsley, president of Lee & Associates Riverside, says that “We don’t see this trend slowing in 2015 and are, in fact, expecting a strong first quarter in 2015.”
Vacancy rates remained stable in the fourth quarter at 5.17%, exhibiting a tightening market given the almost two million square feet of new construction completed in the quarter. Vacancy rates have now been on a declining path for five years from when they reached their peak at almost 20% in 2009. 2015 is projected to show more steady decreases in vacancy, as the market remains stable and new construction in smaller building sizes remains limited.
The fourth quarter summary, which was prepared by Caroline Payan, director of marketing and research of Lee’s Riverside County offices, also found that average actual sales prices per square feet increased in the fourth quarter and will continue to trend upward throughout 2015 as the supply of buildings offered for sale remains limited.
In addition, the construction base for the fourth quarter represented 8.6 million square feet under construction, mostly all in the 100,000-plus-square-foot range, representing a 12.2% increase over the previous quarter.