About Cresa Inland Empire
Cresa Inland Empire is led by Managing Principal Pat Murphy, who has over 30 years of experience in commercial real estate. In association with the Cresa Orange County office, 11 additional Principals service the Inland Empire including Board Member Jeff Manley, Cresa MCS Managing Principal Jason Shepard and Project Management Principal Rick Martin.
Cresa offers an array of integrated services, developed and implemented to give clients the full advantage of our advisors’ expertise, discipline, and judgment. These services include: Global Accounts, Portfolio Strategies, Transaction Management, Project Management, Facilities Services, Location Planning, Lease Administration, Capital Markets, Industrial Services, Sustainability, Sublease & Disposition and Retail Services.
Market Overview
The Inland Empire industrial outlook and overall transaction performance increased noticeably over the last quarter. Large global firms, expanding regional companies and smaller manufactures are busy completing deals, along with healthy renewal and expansion activity. More large-scale land deals on hold the last few years are securing final approvals and moving forward.
This regional office market remains more challenged than the surrounding, more mature markets of Orange and Los Angeles counties. Unfortunately, the uptick in office leasing volumes earlier this year did not continue into the third quarter. But investment sales increased as buyers competed for the best deals in core submarkets.
Market Trends
Industrial product greater than 100,000 square feet will continue to be the preferred product for prospective tenants and expanding users. During 2012, a sampling of these transactions include: Church & Dwight, Home Depot, New Home Furnishing, Reusable Container, Global Tire, Medline Industries and Cardenas Markets. Corporate users interested in expanding their Southern California market share, and/or expanding their distribution hubs will continue to consider the Inland Empire. Vacancy rates remain healthy and asking rent rates increased slightly as the market improves in more established submarkets.
The struggling local economy does not bode well for a quick correction in the office outlook. A still weak housing market, coupled with a high unemployment rate of 12.7 percent, will continue to stress the office market and keep vacancy rates high and hold asking rents firm. Additional downsizing expected by the public sector will put even more space back on the market.
Tenant's Perspective
Industrial tenants can still expect to find product at competitive prices. The large amount of speculative product currently being developed will keep asking rents firm over the short term. In the specific larger, big-box inventory, deals are happening much faster and with fewer concessions, but still priced well when compared to other major markets. The recent increased velocity of lease transactions could make it harder to find inventory for those that choose to wait.
Effective office lease rates will remain very competitive into 2013. Generous concessions will be the norm for prospective office tenants looking to trade up to newer, Class A space. Limited positive leasing momentum will keep any new constructions significantly constrained.