After experiencing several years of rapid, record-breaking growth, the Inland Empire's industrial market shifted last quarter along with the nation's economy.

Vacancies jumped nearly a point and a half to 7.9 percent versus the April-June period, bringing the region's vacancy rate to its highest point in more than four years, according to Grubb & Ellis Co.

Call it a gloomy chain of events: A weakening economy has diminished consumer demand, causing a slowdown at the ports and a reduced need for space to store product.

"We're not seeing the number of big warehouse-distribution requirements that we've seen in the past," said Chuck Belden, executive director, Cushman & Wakefield.

Despite the economic forces working against them, some submarkets remained strong last quarter. The Montclair-Upland submarket kept the region's lowest vacancy rate at 1 percent, while Temecula's rates dropped almost a half-point to 2.6 percent.

The historically desirable Ontario-Mira Loma area didn't fare as well, with vacancies inching upwards to 4.3 percent, an increase from 2.9 percent during the prior quarter. An increase in fuel costs is starting to play a factor in the lower desirablity of the the Inland Empire among warehouse tenants.

"I think what you're going to start seeing is more companies moving away from the concept of three to four distribution centers," Belden said, "and creating a model of having 10 to 15 distribution centers smaller facilities closer to the core of where the population is."

Industrial Market At a Glance

Inventory: 412 million square feet

Under Construction: 18.8 million square feet

Asking Rents: 42 cents


- Harmen Consumer Group leased 301,000 square feet of warehouse and distribution space at Grove View Business Park in Moreno Valley from IDI for 33 cents, triple net. Harmen will take the space for five years-plus and will receive an additional two free months.

- AMB Institutional Alliance purchased a 167,525-square-foot building at Sierra Business Park in Fontana for $14.9 million, or approximately $88.80 per square foot. Sares Regis Group sold the property.

- At Rancho Cucamonga's Jersey Commerce Center, McGrann Paper Corp. inked a deal to take more than 101,000 square feet of warehouse and distribution space. McGrann paid 55 cents a foot for the space, and will lease the property for 62 months, which includes two rent-free months.

- New Classic Home Furnishings signed a four-year lease to take a 216,000-square-foot industrial space at Hemlock Distribution Center at 7875 Hemlock Ave. in Fontana for 35 cents per square foot, triple net. Alere Property Group is the landlord.

- North American Medical Management signed a five-year lease for 4,323 square feet of office space at 2275 Sampson Ave. in Corona at a rate of $2 per square foot, full-service gross. CPI Properties LP owns the property.

- Investors Guy and Andrea Chrest bought a 15,159-square-foot office building at 2131 Elks Drive in San Bernardino for $2.4 million. The Austin Family Trust sold the property.

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