Lee & Associates Riverside Releases Q1 Industrial Market Summary
The 2015 Q1 summary reports strong activity and gross absorption in the first quarter
RIVERSIDE, Calif.—April 3, 2015 — The Riverside office of Lee & Associates, the nation’s largest broker-owned commercial real estate firm, has released its first quarter 2015 Industrial Market Summary for manufacturing/distribution buildings for the East Valley Market in Southern California’s Inland Empire.
The Summary reports that even with a lack of inventory, the East Valley Market posted strong activity and gross absorption. This trend continued on the heels of the great absorption performances in 2014 of 11.4 million square feet and 2013 at 14.8 million square feet. Gross activity in the first quarter was 5.1 million square feet, with investment purchases and lease renewals accounting for 37% of the total.
Demand for distribution buildings continues to keep pace with new supply due to increased port activity, with the main gate of the port being open 24/7, and increased demand from construction supply companies, as new home construction is becoming more active, and residential building permits are on the rise.
“Given these factors, demand for industrial buildings in the Inland Empire’s East Valley is poised to continue to keep pace with new supply,” said Lee & Associates Riverside President David Illsley, noting that 2015’s first quarter absorption figures were just over 3.2 million square feet.
Vacancy rates decreased slightly in the first quarter to 5.13%, exhibiting a tightening market given the 1.3 million SF 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. The remainder of 2015 is projected to show a stable vacancy rate, given continued demand and a projected moderate increase in new supply.
The base for the first quarter represented 11.9 million square feet under construction, with 99% of the total in the 100,000+ square-foot range, a 38% increase over the previous quarter. Two buildings completed construction in the East Valley in the first quarter, with 12 new buildings projected to be completed in the second quarter of 2015. New construction on both a build-to-suit and speculative basis will continue in the region for large, big-box type product. In addition, development interest is starting to formulate on smaller product as well, as rental rates and sales prices are beginning to justify new construction. The area will remain a new construction hot spot for some time.
The first quarter summary, which was prepared by Caroline Payan, director of marketing and research of Lee’s Riverside office, found that average asking sales prices per square feet increased in the first quarter with the supply of buildings offered for sale remaining limited. The market upswing in actual sales prices started in 2014 in the East Valley, and sales prices are expected to show a steady upward trend throughout 2015.
For more information on the Riverside industrial market, visit Lee & Associates Riverside’s website at: