Inland Empire Q3 2018 Office Market Overview
In the third quarter of 2018, the total vacancy rate for the Inland Empire office market decreased 120 basis points from 12.2% last quarter to 11.0%. The decrease in vacancy stems from the Riverside (down 180 basis points) and San Bernardino (down 160 basis points) submarkets. The third quarter closed with positive movement with absorption recording 203,000 square feet. Leasing activity recorded 298,400 square feet, which is above the three-year average.
The weighted average asking rental rate increased during third quarter to $1.80 per square foot (PSF) full service gross (FSG). As a historical perspective, one year ago the asking rental rate recorded at $1.76 PSF FSG.
- The unemployment rate for the Inland Empire was 4.6% as of July 2018, adding 48,300 non-farm jobs to the region over the past year.
- Trade, transportation and utilities registered the largest year-over-year gain, adding 13,600 jobs over the past year. Information and manufacturing recorded a loss of 400 jobs.
Seven of eight submarkets witnessed positive net absorption, with Riverside recording the highest at 86,200 square feet and the Rancho Cucamonga submarket recording the lowest at negative 20,100 square feet. Among building classes, Class A office led net absorption at 96,900 square feet for the quarter, while Class C had the lowest quarterly absorption at 33,600 square feet. a 57,317-square-foot office development is currently under construction located at 3512 14th Street in Riverside. It is expected for delivery in the first quarter of 2019.