RIVERSIDE – The Riverside office of Lee & Associates, the largest broker-owned commercial real estate firm in North America, has released its third quarter 2017 Industrial Market Summary for manufacturing and distribution buildings for the east valley market in Southern California’s Inland Empire.
The third quarter of 2017, even with a lack of inventory, posted strong activity and gross absorption. Gross absorption for 2016 totaled 19.3 million square feet, continuing on the heels of the great absorption performances in 2015 of 15.3 million square feet and 2014 of 11.4 million square feet.
Gross activity in the third quarter was 9.5 million square feet, with investment purchases and lease renewals accounting for 32.2 percent of the total.
“Overall gross activity will only be constrained by supply; however, absorption is expected to remain steady, but may not be as high as the previous year,” Lee & Associates Riverside President David Illsley said, who also noted that while there are more small development projects delivering in the next six to 12 months, there is still a lack of supply.
Absorption is expected to remain steady, but may not be as high as the previous year. Third quarter 2017’s absorption figures were just below 6.4 million square feet, compared to 3.7 million square feet during the same period last year.
Vacancy rates decreased slightly in the third quarter to 4.92 percent. Year-end 2017 is projected to show a stable vacancy rate, although it may rise given a projected moderate increase in new supply, vacancy is expected to remain at low levels as demand remains strong.
The base for the third quarter represented 18.7 million square feet under construction, with 89.6 percent of the total in the 200,000-plus square-foot range, a 23.4 percent increase over the previous quarter. Nine buildings completed construction in the east valley in the third quarter, with 29 new buildings projected to be completed in the fourth quarter of 2017.
Average asking sales prices per-square-foot increased in the third quarter with the supply of buildings offered for sale remaining limited. User buyers are competing with one another for quality buildings.
The report, which was which was prepared by Caroline Payan, director of marketing and research of Lee’s Riverside office, also found that landlords are scrutinizing credit and financials to a great degree and are quicker to evict or push out slow or late paying tenants because of the pent-up demand. Quality tenants are more than happy to pay landlords asking rates.
For more information on the Riverside industrial market, visit Lee & Associates Riverside’s website at www.lee-associates.com/offices/office/?id=2424.