Less Than 1% of Inland Empire Warehouse Space Is Free
The pandemic and global supply chain disruptions have seriously accelerated demand for space
By Greg Cornfield October 12, 2021 12:30 pm
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The hottest industrial market in the country has gotten even hotter in 2021: Despite 20 million square feet added to the market over the past year, the industrial vacancy rate in Southern California’s Inland Empire was lower than in Los Angeles County by the end of the third quarter, dipping below 1 percent.
The pandemic and global supply chain disruptions, along with rapid growth in e-commerce sales over the last 18 months, have seriously accelerated demand for space, according to a new quarterly report from Newmark (NMRK). Inbound port volume was up about 30 percent this year, and more than 70 container ships were stuck anchored off the ports of L.A. and Long Beach to end the third quarter as distributors replenish inventories and hoard goods to ease future disruptions.
Average rents for properties with more than 100,000 square feet in the Inland Empire averaged $0.73 per square foot in the first nine months of 2021, up a whopping 29 percent from the same period in 2020. DHL’s renewal for 830,000 square feet in Fontana led the quarter, followed by National Distribution Centers’ new 760,081-square-foot lease in Eastvale.
In terms of investment sales, the Inland Empire took in $2.3 billion through the first eight months of 2021, the second-most behind L.A. County. Pacific Investment Management put down $123.4 million for 1.12 million square feet in Rialto, and Principal Real Estate Investors paid $94.6 million for 575,000 square feet in San Bernardino.
Nuveen’s $59.6 million acquisition in Ontario came in third for the quarter. Also, Rockefeller Group sold one of its new warehouse developments for $57.5 million.
Moving forward, Newmark said supply chain disruptions will persist until COVID-19 is less of a global health threat, and local demand is not expected to ease anytime soon.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
