2017 Q1 Inland Empire Office Market Snapshot
In second quarter 2017, the total vacancy rate for the Inland Empire office market decreased 40 basis points from 13.9% last quarter to 13.5%. The vacancy rate has been steadily declining since peaking at 25.2% in late 2010. Second quarter closed on a positive note as net absorption recorded 63,300 square feet (SF) for the quarter. Leasing activity grew by 30,000 SF compared to last quarter recording 284,300 SF for the quarter.
The weighted average asking rental rate increased during first quarter to $1.79 per square foot (PSF), full service gross (FSG). This is the first notable asking rental rate increase the Inland Empire office market has witness within the past 12 to 18 months.
Six of eight submarkets witnessed positive net absorption with Rancho Cucamonga recording the highest at 104,700 SF and the Riverside submarket recording the lowest at -48,000 SF.
Among building classes, Class B office led with net absorption at 252,600 SF for the quarter while Class A had the lowest quarterly absorption number at -118,800 SF.
The unemployment rate for the Inland Empire was 5.3% as of February 2017, and experienced job growth of 3.5% over the last 12 months. Trade, transportation and utilities registered the greatest year over year gain, adding 11,300 jobs. Transportation, warehouse and utilities accounted for 68 percent of the job growth in this sector. Another bright spot is construction, which has grown by 9,000 jobs over the past year.