IE Business Daily Business news for the Inland Empire.
The Inland Empire office market had a rough second quarter, with vacancy and net absorption both moving in the wrong direction as the quarter ended.
Vacancy was 9.5 percent, up slightly from the first quarter, while net absorption was minus 9,834 square feet, the first negative quarter in that category since the fourth quarter of 2021, according to CBRE.
The vacancy increase can be attributed to several large buildings being vacated, including Costar leaving its 16,528 square foot space in Ontario. Absorption dropped despite multiple deals in the 1,200-5,000 square foot range being completed on the east side, in part because a 12,000 square foot space became vacant in that market during the quarter, offsetting those gains.
Average lease rates – $1.97 per square foot – were unchanged between the first and second quarter, and construction – 38,892 square feet completed during the quarter remained stable.
The largest office lease of the quarter happened in May when the U.S. General Services Administration signed a 21,058-square-foot lease in Corona. This continues a pattern established early this year of government agencies expanding their office presence in the Inland Empire, according to CBRE.
To whom it may concern:
The article above is misleading. While the Inland Empire Office Market did experience some negative absorption last quarter with an increased vacancy level, the Inland Empire office vacancy rate is the lowest vacancy level among the top 50 US Markets (as reported by CoStar July 11, 2023). And while we have seen some larger office tenants leave the market, the fact that the region is seeing strong growth of new, smaller tenants moving in is a positive trend as these companies are opening in the region to bring their offices closer to where their employees live.
Keep in mind that while the vacancy level did increase to 9.5%, office vacancy levels in both Orange and Los Angeles Counties is considerably higher. Back in 2009, the office vacancy level in the Inland Empire was over 25% – now that was a struggling market.
Please let me know if you wish to discuss further
Thomas Pierik, SIOR
Senior Vice President
Lee & Associates
951-276-3610