inland empire - nai capital lee chang...

2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved

INDUSTRIAL MARKET REPORT

Inland Empire 3rd Quarter 2016

Produced in partnership with


2

Table of Contents and Methodology/Map 2-3

Market Overview 4-5

Statistics by Market 6

Vacancy Rates & Asking Rates 7-8

Leasing & Absorption 9

New Construction 10

Industrial Advisory Board Members 11

Xceligent Team 12

The Inland Empire tracked set consists of an inventory of buildings considered to be competitive by

Xceligent is a leading provider of verified commercial real estate information which assists real estate

professionals, appraisers, owners, investors and developers that make strategic decisions to lease, sell,

buy and develop commercial properties.

Table of Contents/

Methodology of Tracked Set

Tracked

Inventory

(Industrial)

The total square feet (sf) of all existing single and multi tenant industrial properties greater

than 10,000 sf. Flex/R&D buildings with an office build out greater than 30% and a parking

ratio greater than 3:1,000 are excluded.

Direct vacant (sf) The total of the vacant square footage in a building that is being marketed by an agent

representing the landlord.

Net Absorption The net change in physically occupied space from quarter to quarter, expressed in square

feet.

Sublease (sf) Space that is offered for lease by a current tenant, or his agent, within a property. Whether

the tenant is paying rent or not, the space is considered vacant only if it is unoccupied.

Total Available

(sf)

All of the available leasable space within a building, whether it is occupied or vacant, for

direct lease or sublease space.

Total Vacant (sf) The total of all of the vacant square footage within a building, including both direct and

sublease space.


3

Industrial Market Map


4

Overview

Inland Empire Industrial Overview

The Inland Empire closed out the third quarter of 2016 with 433,715 square feet (sf) of positive net absorption.

Despite recording another quarter of positive net absorption, the vacancy rate increased from 3.1% to 3.8% due to several projects being delivered vacant.

IE West took a big hit with the closing of Sports Authority & Sport Chalet. The two bankrupt companies vacated a combined 901,551 sf of distribution space in the Western submarket.

18.5 million square feet of new product has been delivered so far in 2016, 7.1 million sf still remains vacant.

Floor & Decor inked the largest lease of the quarter, taking down 1.1 million sf at the March Business Center in Moreno Valley.

# of Bldgs Inventory (sf) Total Available (sf) Total Vacant (sf) Total Vacancy Rate

(%) Total Quarterly Net

Absorption (sf) YTD Total Net Absorption (sf)

Inland Empire East 2,821 218,203,257 19,052,454 13,162,460 6.0% 1,645,939 6,395,500

Whse/Mfg Class A 436 114,224,644 15,326,568 11,758,727 10.3% 815,648 5,141,056

Whse/Mfg Class B 1,230 69,556,849 2,592,243 928,616 1.3% 178,251 511,129

Whse/Mfg Class C 1,155 34,421,764 1,133,643 475,117 1.4% 652,040 743,315

Inland Empire West 3,481 282,600,021 12,544,073 5,909,046 2.1% -1,212,224 288,950

Whse/Mfg Class A 644 111,701,504 6,181,837 3,411,933 3.1% -781,838 626,097

Whse/Mfg Class B 2,056 147,645,893 5,618,663 2,265,274 1.5% -724,199 -553,055

Whse/Mfg Class C 781 23,252,624 743,573 231,839 1.0% 293,813 215,908

Overall 6,302 500,803,278 31,596,527 19,071,506 3.8% 433,715 6,684,450

# of Bldgs Inventory (sf) Direct Available

(sf) Direct Vacant (sf)

Direct Vacancy Rate (%)

Direct Quarterly Net Absorption (sf)

YTD Direct Net Absorption (sf)

Inland Empire East 2,821 218,203,257 17,696,652 13,145,320 6.0% 1,645,079 6,109,475

Whse/Mfg Class A 436 114,224,644 14,547,846 11,758,727 10.3% 815,648 4,980,261

Whse/Mfg Class B 1,230 69,556,849 2,326,458 911,476 1.3% 177,391 400,097

Whse/Mfg Class C 1,155 34,421,764 822,348 475,117 1.4% 652,040 729,117

Inland Empire West 3,481 282,600,021 10,952,104 5,882,947 2.1% -1,267,774 178,593

Whse/Mfg Class A 644 111,701,504 5,236,536 3,411,933 3.1% -793,838 626,097

Whse/Mfg Class B 2,056 147,645,893 4,998,104 2,241,874 1.5% -765,949 -666,111

Whse/Mfg Class C 781 23,252,624 717,464 229,140 1.0% 292,013 218,607

Overall 6,302 500,803,278 28,648,756 19,028,267 3.8% 377,305 6,288,068

# of Bldgs Inventory (sf) Available Sublease

(sf) Sublease Vacant

(sf) Sublease Vacancy

Rate (%) Sublease Quarterly

Absorption (sf) YTD Sublease Net

Absorption (sf)

Inland Empire East 2,821 218,203,257 1,355,802 17,140 0.0% 860 286,025

Whse/Mfg Class A 436 114,224,644 778,722 - 0.0% - 160,795

Whse/Mfg Class B 1,230 69,556,849 265,785 17,140 0.0% 860 111,032

Whse/Mfg Class C 1,155 34,421,764 311,295 - 0.0% - 14,198

Inland Empire West 3,481 282,600,021 1,591,969 26,099 0.0% 55,550 110,357

Whse/Mfg Class A 644 111,701,504 945,301 - 0.0% 12,000 -

Whse/Mfg Class B 2,056 147,645,893 620,559 23,400 0.0% 41,750 113,056

Whse/Mfg Class C 781 23,252,624 26,109 2,699 0.0% 1,800 -2,699

Overall 6,302 500,803,278 2,947,771 43,239 0.0% 56,410 396,382


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Inland Empire Industrial Overview

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016

Historical Vacancy Rate & Net Absorption

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016

Historical Vacancy Rates by Class

Whse/Mfg Class A Whse/Mfg Class B Whse/Mfg Class C

(500,000)

500,000

1,500,000

2,500,000

3,500,000

4,500,000

5,500,000

6,500,000

3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016

Historical Net Absorption by ClassWhse/Mfg Class A Whse/Mfg Class B Whse/Mfg Class C


6

Statistics by Market

# of Bldgs Inventory (sf) Total Vacant (sf) Sublease Vacant

(sf) Vacancy Rate

(%) Total Quarterly Absorption (sf)

YTD Total Net Absorption (sf)

Inland Empire East 2,821 218,203,257 13,162,460 17,140 6.0% 1,645,939 6,395,500

10,000 - 24,999 sf 1,473 23,170,022 379,764 0 1.6% 24,535 216,335

25,000 - 49,999 sf 606 21,109,906 516,099 0 2.4% 69,576 44,321

50,000 - 99,999 sf 334 22,829,581 597,079 17,140 2.6% -56,988 -179,601

100,000 - 249,999 sf 218 32,192,829 590,828 0 1.8% 198,295 1,019,806

250,000 - 499,999 sf 87 32,205,971 3,241,831 0 10.1% -331,955 1,615,562

500,000 - 749,999 sf 50 31,002,505 3,891,388 0 12.6% 639,473 1,473,435

Greater than 750,000 sf 53 55,692,443 3,945,471 0 7.1% 1,103,003 2,205,642

Inland Empire West 3,481 282,600,021 5,909,046 26,099 2.1% -1,212,224 288,950

10,000 - 24,999 sf 1,652 25,671,307 226,325 0 0.9% -1,822 69,309

25,000 - 49,999 sf 708 24,477,197 410,296 24,299 1.7% 53,632 23,908

50,000 - 99,999 sf 414 28,906,396 399,759 1,800 1.4% -66,464 -6,295

100,000 - 249,999 sf 411 62,382,287 617,958 0 1.0% -11,129 383,680

250,000 - 499,999 sf 204 73,075,731 2,041,646 0 2.8% -452,362 474,141

500,000 - 749,999 sf 55 33,520,334 1,475,450 0 4.4% -734,079 -267,663

Greater than 750,000 sf 37 34,566,769 737,612 0 2.1% 0 -388,130

Overall 6,302 500,803,278 19,071,506 43,239 3.8% 433,715 6,684,450


7

Vacancy Rates & Asking Rates

Vacancy Rate % Weighted Average Asking Rent (NNN)

3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016

Inland Empire East 6.2% 5.7% 5.7% 5.7% 6.0% $0.44 $0.44 $0.42 $0.44 $0.46

Whse/Mfg Class A 9.6% 8.8% 9.1% 9.0% 10.3% $0.40 $0.40 $0.39 $0.39 $0.42

Whse/Mfg Class B 2.0% 2.0% 1.3% 1.6% 1.3% $0.55 $0.45 $0.44 $0.48 $0.49

Whse/Mfg Class C 4.5% 3.5% 4.0% 3.3% 1.4% $0.85 $0.86 $0.90 $0.79 $0.83

Inland Empire West 1.8% 1.3% 1.7% 1.1% 2.1% $0.42 $0.51 $0.53 $0.57 $0.58

Whse/Mfg Class A 2.4% 1.3% 2.4% 0.8% 3.1% $0.37 $0.49 $0.53 $0.53 $0.53

Whse/Mfg Class B 1.4% 1.2% 1.1% 1.0% 1.5% $0.44 $0.55 $0.54 $0.60 $0.60

Whse/Mfg Class C 2.0% 1.9% 2.5% 2.3% 1.0% $0.60 $0.50 $0.51 $0.67 $0.67

Overall 3.7% 3.2% 3.4% 3.1% 3.8% $0.43 $0.46 $0.45 $0.50 $0.50


8

Vacancy Rates & Asking Rates

6.0%

2.1%

Inland Empire East Inland Empire West

Vacancy Rate by Submarket

$0.46

$0.58


Weighted Average Asking Rent by Market (NNN)

$0.31 $0.38

$0.67 $0.64

$0.75

$1.00

$0.46 $0.52

$0.70

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

Whse/Mfg Class A Whse/Mfg Class B Whse/Mfg Class C

Asking Rent Range by Class (NNN)


9

Leasing & Absorption

Largest Leases & Absorption Changes

Property Name Occupied or Vacated (sf)

Tenant Name Submarket Specific Use

24101 Iris Ave 1,103,003 Floor & Décor Inland Empire East Whse/Mfg

11188 S Citrus Ave 639,473 Walmart Inland Empire West Whse/Mfg

11618 Mulberry 633,953 LuLaRoe Inland Empire West Whse/Mfg

11600 Iberia St 408,806 Home Depot Inland Empire West Whse/Mfg

5885 Sierra Ave 403,182 LG Electronics Inland Empire West Whse/Mfg

2350 Fleetwood Dr 270,570 ADESA Inland Empire West Whse/Mfg

5200 Shea Center Dr 244,947 Restoration Hardware Inland Empire West Whse/Mfg

2225 Sequoia Ave (285,000) Sport Chalet, Inc. Inland Empire West Whse/Mfg

13521 Santa Ana Ave (423,460) Fontana Logistics Center, Inc. Inland Empire West Whse/Mfg

675 E Central Ave (480,510) Kohler Co. Inland Empire East Whse/Mfg

13053 San Bernardino Ave (616,551) Sports Authority Inland Empire West Whse/Mfg

Top Transactions

Property Name Sale Price Sold (sf) Buyer Seller Submarket Specific Use

11260 Elm Ave $42,192,640 434,170 States Logistics Services, Inc.

Bridge Fontana LLC Inland Empire West Whse/Mfg

1080 Mount Vernon Ave

$24,500,000 255,106 DCT MMI Of BDI Riverside Mt Vernon

Inland Empire East Whse/Mfg

10220 4th St $14,443,520 116,480 décor Ware International, Inc.

Turner Real Estate Investments

Inland Empire West Whse/Mfg


10

New Construction

7,445,552

8,220,720

7,000,000

7,200,000

7,400,000

7,600,000

7,800,000

8,000,000

8,200,000

8,400,000


Current New Construction by Submarket


11

Industrial Advisory Board Members

Inland Empire

CBRE Dave Consani

Jim Koenig

Colliers International Josh Hayes

Mark Zorn

Daum Commercial Gus Andros

Rick John

JLL Mike McCrary

Ruben Goodsell

Lee & Associates Michael Chavez

Majestic Realty Co Kyle Valley

NAI Capital Nick Chang

Newmark Grubb Knight Frank Mark Kegans

Ron Washle

Strata Realty Tim Hawke

Voit Walt Chenoweth


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This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we

have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to

independently confirm its accuracy. For more information, please contact :

Matt Nelson Director of Analytics 714-509-1404 [email protected]

Monique Ebel Director of Research 714-538-8432 [email protected]

Sean Pullin Director of Client Services 714-855-5801 [email protected]

Tim Hayes Executive Director - AIR 213-687-8777 [email protected]

Xceligent Inland Empire Team

Produced in partnership with

mailto:[email protected]




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