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Red Hot Industrial Conditions Persist

Los Angeles is home to the nation’s busiest seaport complex and experienced the tightest vacancy rate in the country, which drove many tenants’ search for industrial space expansions or consolidations into the Inland Empire. Peak cargo volumes at SoCal seaports fueled demand for industrial space in 2018, and more of the same is expected this year.

Due to some uncertainty heading into 2019, developers and users in the Inland Empire rushed to complete deals and product deliveries by year-end 2018. This led to a record breaking 2018, but a slow – yet still healthy – start to 2019.

NKF reported market-wide vacancy remained under 5% for the 24th consecutive quarter, while rent set a new record high. Among the totable deals was Amazon pre-leasing 680,000 square feet in Fontana, in what will become the company’s 15th inland fulfillment center.

JLL reported Q1 leasing demand was up by 33% over the same period last year, propelled by large retail, e-commerce and logistics deals. Q1 average asking rents trended up at $0.63-per-square-foot, according to JLL.

Occupancy gains of 1.7 million square feet kept absorption positive for the 39th consecutive quarter, reported Cushman & Wakefield. The Inland Empire East submarket absorbed 2.1 million square feet of space. Although total retail sales growth is forecast to decelerate from 5.1% in 2018 to 4.4% in 2019, eCommerce sales are expected to grow 15.1% to $605.3 billion in 2019. Consequently, the need for warehousing and distribution space will only increase in the Inland Empire predicted Cushman & Wakefield.

NKF says new construction leasing once again drove net absorption gains: with roughly three million square feet of Q1’s absorption activity coming from new buildings constructed in 2010 or later. Notable move-ins included Rubbermaid (466,255 square feet in a Victorville expansion); DCG Logistics (405,504 square feet in Jurupa Valley); and Ryder Logistics (222,063 square feet in Perris).

JLL says big box projects continue to fill the construction pipeline, accounting for more than 61% of total volume under construction. The firm predicts the Inland Empire East submarket will capture the majority of market growth for the remainder of the year, even in the face of a market correction.

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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.

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