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Market Report

Riverside-San Bernardino Industrial

Second Half 2019

Surge of Industrial Completions Closes Out the Year; Institutional Buyers Acquire Newer Assets in Bulk

 

Demand rises above wave of fourth quarter deliveries. The Inland Empire has recorded a stretch of strong industrial demand this cycle, translating to the absorption of 110 million square feet over the past five years ending in September. Healthy pre-leasing and robust demand for available space during that span negated the impact of supply additions, maintaining tight vacancy while allowing the region’s average asking rent to rise by an average of 18 percent annually. These market conditions bolstered the development pipeline, with a number of speculative projects commencing in the past two years. The recent uptick in project starts will equate to another year with more than 20 million square feet of space coming online, ranking the region as one the nation’s top metros for industrial construction. Nearly 7.6 million square feet of this space will be finalized during the fourth quarter of 2019. Amid this influx of new supply, net absorption will rise above the surge in new inventory, holding vacancy below the 5 percent thresh hold. Consistent demand for floor plans will support another year of sizable rent growth in 2019, pushing the average asking rate to a historically high mark.

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