Friday, April 18, 2008

First Quarter 2008 East Inland Empire Industrial Report

Industrial Vacancy Rate Holds Steady As Asking Rental Rates Decline

Sales and leasing activity in the first quarter totaled 5.0 million SF, more activity than occurred in the second half of 2007. This was due to several very large deals that stalled last quarter and were not able to close until the beginning of this year, such as Whirlpool’s 1.6 million SF lease in Perris. This surge in sales and leasing activity boosted net absorption to 2.8 million SF, up significantly from 583,600 SF the previous quarter although less than the 3.2 million SF from the first quarter of 2007. Recently completed space totaled 3.3 million SF this quarter. The amount of space under construction has slowly declined over the past year and now stands at 8.6 million SF, down from 10.7 million SF last quarter and down from 13.3 million SF one year ago. This gradual decrease in construction activity coincides with a softening in the overall economy and rising concerns of overbuilding. Long-term, however, tight market conditions and low levels of construction in the rest of the Los Angeles Basin will inevitably cause demand to shift to the East Inland Empire, which is the only expansion area left in the region.

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