California + Inland Empire + Industrial | August 1, 2019

Industrial Market Firing on All Cylinders, Except Leasing Activity

The latest reports arrived from several SoCal brokerage research teams and a quick look at the Inland Empire industrial market numbers for Q2 2019 confirm it remains one of the hottest in the country. CBRE put it this way: “Industrial growth and prosperity defined the Inland Empire, with strong demand and development activity demonstrating how desirable the market has become.”

Colliers International researchers said there was “strong rent growth as space remains scarce.” It notes rents have increased more than 15% in the past 12 months and “landlords continue to be bullish on rates as vacancy rates continue to tighten.”

Sales transaction volume eclipsed 5.98 million square feet, the highest it has been since 4Q 2017, reports Kidder Mathews.

NKF noted absorption achieved parity with construction deliveries this quarter, keeping vacancy unchanged from three months ago. Yet, NKF predicted the coming summer months will be particularly interesting since that’s typically when retailers stock up for the holiday season. Many retailers front-loaded imports in late 2018 to avoid the negative impact of U.S. tariff charges on $250 billion worth of Chinese goods, which went into effect in early May 2019, pointed out NKF.

NAI reported construction continued at a brisk pace with 24.7 million square feet underway. Year-to-date it says deliveries have been well-received; of the 4.1 million square feet completed, nearly 55% had leased up.

The dark cloud that moved over the Inland Empire was leasing. Kidder Mathews reports leasing activity in 2Q 2019 experienced a slowdown with 256 transactions and a total volume of 9,015,614 square feet. This is down from a year prior when the market reported 345 transactions and a deal volume of over 14.2 million square feet. A decrease in the leasing activity may be attributed to occupiers re-assessing current real estate tactics, as direct rental rates concluded the quarter at the highest on record for the market, notes Kidder Mathews.

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About Dennis Kaiser

Dennis Kaiser is Vice President of Content and Public Relations for Connect Commercial Real Estate. Dennis is a communications leader with more than 30 years of experience including as a journalist and in corporate and agency marketing communications roles. He is responsible for Connect’s client content operations and is involved in a range of initiatives ranging from content strategy, message development, copywriting, media relations, social media and content marketing services. In his most recent corporate communications roles, he led a regional public relations effort across Southern California for CBRE, played a key marketing role on JLL’s national retail team, and was responsible for directing the global public relations effort at ValleyCrest, the nation’s largest commercial landscape services company. In addition to his vast commercial real estate experience, Dennis has worked on communications and launch strategies for a number of residential projects such as Disney’s Celebration in Florida, Ritter Ranch in Palmdale California (7,200 homes, 22,000 acres), WaterColor in Florida and PremierGarage in Phoenix. Dennis’s agency background included firms such as Idea Hall and Macy + Associates. He has earned an outstanding reputation with organization leaders as a trusted advisor, strategic program implementer, consensus builder and exceptional collaborator. Dennis has developed and managed national communications programs for Fortune 500 companies to start-ups, both public and private. He’s successfully worked with journalists across the globe representing clients involved in major-breaking news stories, product launches, media tours, and company news announcements. Dennis has been involved in a host of charitable and community organizations including the American Cancer Society, Easter Seals, BoyScouts, Chrysalis Foundation, Freedom For Life, HOLA, L.A.’s BEST, Reach Out and Read, Super Bowl Host Committee, and Thunderbirds Charities.