Inland industrial space has a leasing hiccup, but building continues
Driven by record shipments from coastal ports, Inland distribution and fulfillment centers had a third-quarter vacancy rate under 5 percent, and while leasing rates dropped steeply compared with a year ago, that direction is expected to change as under-construction projects become available.
The expansion of e-commerce has put nearly 540 million square feet of big-box buildings in Riverside and San Bernardino counties, with construction underway for even more. Projects in Moreno Valley, Rialto, Chino and Riverside each top 1 million square feet.
Commercial real estate companies Kidder Mathews and Jones Lang LaSalle each issued recent third-quarter assessments for the Inland area industrial real estate market, and while numbers predictably don’t match, both reports cite robust activity at the Long Beach and Los Angeles ports as a generator and forecast continued growth for the Inland market.
“Unrelenting e-commerce demand and the Inland Empire’s geographic advantages project sustained market stability into the remainder of the year and into next,” the JLL report said.
“Imports through the Port of Long Beach continue to record record-high shipment quantities, contributing to the high demand in industrial space,” the Kidder Mathews analysis said. “As a result, upward pressure on vacancy and availability in the short run remains unlikely, in spite of new inventory being added in the coming quarters.”
The year-over-year leasing rate dropped 62 percent in the third quarter, Kidder Mathews said, but with 21.8 million square feet under construction for the Inland area, the commercial real estate company said leasing should pick up. The availability of space rate was down about 20 percent from one year ago.
Other third-quarter numbers: Vacancy was at 4.8 percent, down from 5 percent from the same quarter in 2016; the asking square-foot lease rate was 54 cents a square foot, up nearly 15 percent from a year earlier, when it was 47 cents.