Lee & Associates Riverside Releases Third Quarter Industrial Market Summary
The third quarter summary reports strong activity and strong gross absorption.
The Riverside office of Lee & Associates, the nation’s largest broker-owned commercial real estate firm, has released its third quarter 2014 Industrial Market Summary for manufacturing/distribution buildings for the East Valley Market in Southern California’s Inland Empire.
The summary reports that even with tremendous lack of inventory, the third quarter still posted strong activity and gross absorption. Absorption in 2013 of just under 14.8 million square feet surpassed the figures seen in 2012, and represented the largest amount of square feet absorbed annually in the history of the marketplace.
The report also found that gross activity in the third quarter was just under 4.6 million square feet, with investment purchases and lease renewals accounting for 42% of the total. Demand for distribution buildings continues to outpace new supply due to increased port activity and increased consumer confidence.
“We continue to see a great deal of activity and a continued robust industrial market in the East Valley market,” said David Illsley, president of Lee & Associates Riverside. “We expect this trend to continue into the fourth quarter and into 2015.”
Vacancy rates decreased in the third quarter to 5.1%, tightening the market across almost all size ranges. Vacancy rates have now been on a declining path for four years from when they reached their peak at almost 20% in 2009. Year-end 2014 will show more steady decreases in vacancy, as the market remains stable and new construction in smaller building sizes remains limited.
The third quarter summary, which was prepared by Caroline Payan, director of marketing and research of Lee’s Riverside County offices, also found that construction supply companies are becoming extremely active as a result in increased construction as well as logistics companies expanding their footprint and establishing new facilities in the market. Given these factors, demand for industrial buildings in the Inland Empire’s East Valley is poised to continue to outpace new supply with third quarter 2014 absorption figures at 2.7 million square feet.