Industrial Market At a Glance
Inventory:
361 million
Under Construction:
24.2 million
Asking Rents:
41 cents
The Inland Empire’s unemployment rate hit its lowest mark in 40 years as the area added nearly 5,800 new white-collar jobs in 2006, giving the region’s office market a boost last quarter.
Not a single Inland Empire submarket saw a vacancy increase during the January-March period, with office vacancies region-wide falling slightly to 7.3 percent.
“Ten years ago office vacancy rates were in the mid-20 percent range,” said Mary Sullivan, a vice president with Grubb & Ellis Co. “To drop to the mid-sevens while we’re adding substantial amounts of new product is mind boggling.”
Class A office rents passed the $2 mark last year and have been holding steady since, increasing a penny to an all-time high of $2.12 last quarter.
And despite news of serious trouble in the subprime mortgage industry and a spike in defaults among area homeowners with those mortgages, traditional mortgage firms are still banking on a strong housing market.
For example, Just Mortgage Inc. announced last quarter it will move its headquarters from Pomona to Rancho Cucamonga, where it signed a long-term lease to take 60,000 square feet of space at the $60 million mixed-use project HavenPark.
In the industrial market, rental rates rose just a penny last quarter to 41 cents per square foot, matching rents from the same period a year ago, while vacancies remained at 4.4 percent, a sizable uptick from 2.8 percent during the same period in 2006.
“There are temporary shifts out here, especially in industrial, because of the size of the product that hits the market,” said Sullivan. “But the market momentum is maintaining.”
The vacancy rates varied wildly between submarkets, but Ontario/Mira Loma, which serves as home to nearly a third of the Inland Empire’s total industrial square footage, boasted one of the region’s lowest vacancies, 1.9 percent.
Ontario’s 49 cent industrial asking rents were also 20 percent higher than the Inland Empire’s average last quarter, thanks in part to its location near several major freeways and its closer proximity to LA’s ports than other easterly submarkets.
Lizbeth Scordo
MAIN EVENTS
-RREEF acquired a three-building Class A office portfolio in Ontario from the Garrett Group. The purchase includes a two-story building and an eight-story structure at One Lakeshore Centre along with the five-story Ontario Corporate Center. The portfolio is 89 percent leased to tenants including Morgan Stanley and Marcus & Millichap. The purchase price was not disclosed, but the deal was one of the largest office sales in Inland Empire history, according to broker CB Richard Ellis.
-Lakha Investments, of Bellevue, Wash., purchased the 263,757-square-foot retail center Crossroads Marketplace in Chino Hills for $73.5 million. Tenants include Beverages & More, Bed Bath & Beyond and Costco. A partnership between American Realty Advisors and Krausz Companies Inc. sold the complex.
-Just Mortgage, Inc. signed a long-term lease to take 60,000 square feet of office space at the Hileman Co.’s HavenPark, a $60 million mixed-use project in Rancho Cucamonga. With build-out scheduled for third quarter, HavenPark’s office portion is fully pre-leased.
-Nature’s Best, a distributor of health foods and natural products, signed a 10-year lease to occupy a 409,588-square-foot build-to-suit facility at Watson Commerce Center Chino in a deal valued at $25 million.
-Safco Products Co., a manufacturer of workplace organization products, purchased a new 190,000-square-foot industrial property at Majestic Business Center in Riverside from Majestic Realty Co. Safco will use the building, part of the 1,000-acre Meridian Business Park, as a regional distribution facility. The transaction was valued at $15.5 million.
