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Inland Empire Industrial Market Report

3rd Quarter 2021

Posted In — Market Research | Market Report

MARKET DRIVERS

LEASE RATES CONTINUE TO SPIKE as tenants from Los Angeles and Orange County seek opportunities across the metro. Direct asking lease rates concluded the third quarter at $0.85/SF, a new all-time high.

DIRECT VACANCY LEVELS COMPRESSED further in 3Q 2021 to 1.6%, a historic low. Demand for newer state-of-the-art locations has never been higher as new construction projects are commonly pre-leased or leased within a couple months, keeping availabilities limited.

FUELED BY THE RISE in ecommerce and the pursuit of perfecting logistical channels, there was no shortage in demand for big-box locations. Transportation related companies continued their expansion efforts as DHL, National Distribution Centers, Unis, and XPO Logistics were some of the top leases in the third quarter.

CONSTRUCTION DELIVERIES SLOWED in 3Q 2021 with over 1.9M SF entering the market, which may be attributed to increases in material prices and supply chain constraints. 24.5M SF remain under construction.

ECONOMIC REVIEW

THE PORTS OF LOS ANGELES processed 954,377 TEU’s in the month of August, bringing the first eight-month total to over 7.2M TEU’s, an increase of 30% compared to 2020.

AS OF AUGUST, the unemployment rate was at 7.6% with transportation, warehousing, and utilities expanding by 1,500 jobs.

NEAR TERM OUTLOOK

MOVING FORWARD, we can expect activity to remain robust as demand continues to outpace supply. Anticipate renewals to increase in the following quarters as historically low vacancies sweep across the LA Basin, providing limited options for relocations. With competition increasing and properties frequently obtaining numerous offers, rental rates will continue to increase at rapid pace.

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