Lee & Associates Riverside Releases Year-End 2013 Office Market Summary
Lee & Associates Riverside Year-End Market Report Indicates Stabilization and Continued Growth Are Expected to Continue for 2014
RIVERSIDE, Calif. — October 2, 2013 — The Riverside office of Lee & Associates, the nation’s largest broker-owned commercial real estate firm, has released its 2013 year-end report for the Inland Southern California office market. The report, prepared by Caroline Payan, director of marketing and research of Lee’s Riverside office, projects that office market stabilization and growth, which underscored 2013, is expected to
continue for 2014.
“This report is encouraging for property owners as the region continues to see decreasing office vacancy levels across all the markets and product types,” said Tom Pierik, SIOR, senior vice president of Lee & Associates Riverside. “In addition, the Inland Southern California office market recorded its fourth consecutive year of positive net absorption and we expect this trend to continue.”
Net absorption in the region totaled over 750,000 square feet, representing an approximate 140,000-square-foot increase over 2012 levels. Vacancy rates dipped region wide to 18.5 percent. Absorption continues to be driven by large transactions and the availability of large blocks of contiguous space is rapidly shrinking.
Absorption and vacancy rates in the region follow these overall trends, and 2013 posted a historical increase in net absorption over 2012 totals:
- The San Bernardino and Ontario markets outperformed their 2012 totals.
- All property classes continue to decline in vacancy, with Class B properties being the star performer in 2013 dropping, 10 percent since year end 2012.
- Class B Properties continue to show significant strength, with almost 640,000 square feet absorbed in 2013.
- Absorption and vacancy rates remain steady in Class C Properties.
- Government and healthcare users remain largely active, absorbing blocks of space over 30,000 square feet.
- Velocity in the Corona submarket is starting to increase, indicating that the gradual return of the job and housing markets in Los Angeles and Orange Counties is starting to expand to the Inland Empire.
The report, which is based on Lee’s transaction activity for 2013, also showed that property values are increasing and, with the recent sale of Market Street Corporate Center and Riverside Gateway to Alliance Commercial Partners out of Denver, these values are quickly approaching the range of $200 per square foot. Other notable transactions in the marketplace during the second half of 2013 include the sale of Two Vanderbilt Way to IEHP and the sale of Park Plaza in Redlands to Silagi Development. There continues to be strong interest by both institutional and regional capital looking to acquire well located office projects with the potential for rental growth.