April Article

SB Sun:

The Inland Empire industrial market has shown continued weakness in the first quarter of 2009. Over the past 12 months, the industrial vacancy rate for the Inland Empire has increased from about 8 percent to its current rate of 14.6 percent. Average asking rents have declined in response to rising vacancy rates, from $0.43 PSF per month last year to $0.37 PSF per month currently.

Over this same time period, industrial employment in the Inland Empire has been declining as well. According to the State Employment Development Department, between February 2008 and February 2009, the Trade, Transportation and Utilities sector has shed 22,600 jobs, construction employment has decreased by 23,400 jobs and the manufacturing sector has declined by 13,200 jobs. These industries are heavy users of industrial space and employment cuts in these sectors generally precede increases in the vacancy rate.

One of the drivers behind the rising unemployment rate and decreases in industrial demand has little to do with the local economy but is influenced more by national and global economies.
Over the past decade, the industrial base of the Inland Empire has dramatically increased as some of the largest and most modern warehouses and distribution centers in the world were constructed here.

The reason for this buildup is fairly simple: There were only two West Coast ports that could handle the flood of imported Asian goods, and both were located here in Southern California.