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Inland Empire Retail Market Continues to Grow

By Dennis Kaiser

The Inland Empire isn’t often considered a retail powerhouse market, which is natural given the dominance of the industrial sector. But a mid-year check-in with Progressive Real Estate Partners’ Brad Umansky reveals retail is hot and is expected to remain so. Connect Media’s Dennis Kaiser got a snapshot of the market trends in our latest 3 CRE Question & Answer feature:

IE Brad-Umansky

Q. Where does the Inland Empire retail market stand at the mid-point of the year? What are the main highlights?

A. The demand for retail space in SoCal’s Inland Empire market is the strongest it has been since 2007. Rents for new projects are exceeding the pre-recession highs, vacancy continues to decline moderately, cap rates are at historic lows, and national retailers are competing aggressively for the best locations, while market fundamentals across the board continue to improve. The unemployment rate in the IE is down to 5.3%, and it’s poised to go even lower by the end of the year.

Q. How do those factors impact the Inland Empire retail market?

A. Retail Absorption is Up: In the first six months of the year, we saw about 478,000 square feet of net absorption which is almost as much as ALL of 2015 (500,000). There is currently 14.7 million square feet of available space to lease. We are experiencing challenges in leasing the last spaces in many centers due to the fact that for every space that gets leased, the universe of potential users goes down because of a variety of factors.

Rising Lease Rates: We have signed many leases in the IE at north of $3 per square foot in newer high quality centers. We have also signed many more at rates of $1.25 to $1.75 per square foot in older lesser quality centers, which are the rates that these same properties commanded 15 years ago. This huge variance in lease rates makes understanding the marketplace very challenging for all.

Q. What is driving growth in the Inland Empire retail sector?
A. Retail Sales and New Categories Drive Growth: Retail sales continue to improve,  and we’re seeing a shift in the types of users that are most active in the marketplace. In this new omni-channel world, service, health, beauty, restaurant and entertainment users, all of which benefit from being internet resistant, are filling the space.

Be sure to register for Connect Inland Empire on October 6 to find out more about the region’s economy and CRE.

For comments, questions or concerns, please contact Dennis Kaiser

Connect

Inside The Story

Connect with PREP’s Umansky

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.

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