The Inland Empire's industrial activity slowed again last quarter, though the market continued to prove it can still support much of the new construction coming on line, thanks to demand for big-box space.

Sale and lease activity fell more than 13 percent during the July-September period, to 7.2 million square feet, according to Grubb & Ellis Co. At the same time, vacancies rose just one-tenth of a point, to 4.9 percent, even though an additional 6 million rentable square feet of industrial space was added to the market.

Weber Distribution, a third party logistics provider, absorbed some of last quarter's new space when it signed a 10-year lease for 564,000 industrial square feet at AMB Redlands Distribution Center, a new 1.3 million-square-foot warehouse in Redlands.

Sam Foster, senior vice president at Jones Lang LaSalle, said big companies seeking giant blocks of space simply have no choice but to look to the Inland Empire. "Most searches are in the entire L.A. Basin, and almost all those people would love to find something close to the port, but you just can't find a half million feet there, so they're searching in the Inland Empire."

Many of the large, national corporations Foster represents are looking for spaces of at least a few hundred thousand square feet, while one is seeking more than a million square feet. For blocks of that size potential tenants must head east.

While some easterly submarkets including Redlands/San Bernardino and Colton/Rialto saw vacancies dip last quarter, Moreno Valley/Perris saw a 15-point spike in its vacancy rate, which now sits at 40 percent. That jump can be attributed to the completion of the Perris Distribution Center, which at 1.7 million square feet became the nation's largest speculative industrial development. The project came on line without any tenants.

Mary Sullivan, a vice president with Grubb & Ellis Co., said the submarket's vacancy rate was an exception to the overall trend. "If this amount of space became available in Ontario it would be a minor blip," she said. "But it's an emerging submarket and the existing base is small."

Sullivan said she expects the Perris property to be leased and off the market soon.


- Kia Motors America signed a 10-year lease for a 403,956-square-foot industrial property at Meridian Business Park in Chino. The auto manufacturer is expanding its parts distribution center from a smaller facility in Riverside. The lease includes a right of refusal option to expand into the building's remaining 85,300 square feet.

- In Perris, First Industrial Acquisitions purchased a 595,000-square-foot industrial complex from National RV Holdings, Inc. National RV will lease back the property for 10 years with two five-year renewal options. The sale/leaseback transaction is valued at $31.8 million. The property, located at 3411 N. Perris Blvd., includes five industrial buildings on 48 acres of land.

- Philips Consumer Electronics inked a five-year lease to take nearly 230,000 square feet at 25300 Globe Street in Moreno Valley in a deal worth more than $5.1 million. Moreno Valley Industrial Partners is the landlord. Philips will occupy more than half of Globe Distribution Center, a new logistics facility which still has 172,700 square feet of space available for lease.

- Krikorian Premiere Theatres signed a long-term lease for a 60,000-square-foot, 14-screen, stadium-seating multiplex at Majestic Realty Co.'s Mountain Grove at Citrus Plaza in Redlands. Krikorian's Mountain Grove Cinema is scheduled to open next summer. Krikorian is the first signed tenant at the mixed-use project.

Lizbeth Scordo

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