RIVERSIDE, CA—GlobeSt.com has exclusively obtained an advanced copy of Lee & Associates‘ second quarter 2014 industrial market summary for manufacturing/distribution buildings for the East Valley Market in Southern California’s Inland Empire. The summary reports conditions of a stabilized market with activity and gross absorption both strong in the second quarter.
“Gross activity in the second quarter was just under 7.3 million square feet, with investment purchases and lease renewals accounting for 56.3% of the total,” says the report. “Demand for industrial buildings in the Inland Empire’s East Valley is expected to continue to keep pace with new supply with second quarter of 2014 absorption figures at just under 3.2 million square feet.”
According to Lee & Associates’ Riverside president, David Illsley, “Due to the lack of available space in the marketplace and historically low vacancy rates, off market and direct deals represent some of the best opportunities. Indeed, these deals are becoming more prevalent in the market.” He adds that “2014 will prove a great time for owner/users to purchase with interest rates still low and prices still below replacement costs.”
Vacancy rates decreased in the second quarter to 5.26%, tightening the market across almost all size ranges. Vacancy rates, which have been on a steady decline the last four years, show more steady decreases in vacancy, as the market remains stable and new construction in smaller building sizes remains limited, the firm says.
The second quarter summary, which was prepared by Caroline Payan, director of marketing and research of Lee’s Riverside office, also found that actual sales prices per square feet will continue to trend upward throughout 2014 as the supply of buildings offered for sale remains limited. As a result, some owners are trying to anticipate the market upswing in sales prices as the East Valley is now seeing product listed for sale in the triple digit range.
New construction in the second quarter represented just over 10.8 million square feet, with all in the 200,000-plus-square-foot range, the firm says. This represents a 2% decrease over the previous quarter. Eight buildings completed construction in the East Valley in the second quarter. Six more buildings are scheduled for completion in the 3rd quarter of 2014, with four of the buildings already being pre-leased.