West Inland Empire Industrial First Quarter 2009 Report

I think this may be the earliest my reports have come out.

The link above works, so you can access the report that way.

Or you can click this link if you are lazy.

Rents dropped by a lot this quarter. I think landlords are starting to get the message. Seeing a lot of teaser rates listed and some brokers are adding concessions right in the comments of the listings.

That is making it a lot harder for the TBD (to be determined) listings to get my attention. There is nothing to be learned from a TBD listing.

Brokers have an idea of what it takes to move a building, because buildings are moving. 3.8 million SF moved this quarter, the most quarterly activity in the last 4 quarters.

Of the 37 buildings that leased this quarter, only 4 were listed as TBD. By contrast, 3 leased that had teaser rates.

Big deal right?

Well, 28% of the listings on the market now are TBD as compared to only 4% of the listings that have teaser rates.

So it looks like teaser rates work.

This is especially true when you look at the effective rent for these two buildings. While the TBD buildings do have a higher initial rental rate, there is still a lot of free rent involved and over the term of the lease it all about evens out.

Except that TBD buildings have stayed on the market longer.

With price conscious tenants, it may be better to list a low price and get bodies in the buildings instead of hiding behind a TBD listing and hope for 2007 rents (with 2009 concessions).

If I was a landlord, I think I would prefer 1/2 rent to no rent.

But I do not get to decide these things.

The market will.

And as is often the case in matters like these, if you cannot adapt and change to the times, the punishment will be swift, harsh and without prejudice.