Local office market treads water

The Inland Empire office market slowed during the third quarter, as demand for space stalled and the region posted a negative absorption rate.

The region’s 15.1 percent vacancy rate was essentially unchanged from the second quarter, according to Newmark Grubb Knight Frank’s third quarter report on the Inland office market, which was released Thursday.

However, the Inland region absorbed minus 9,624 square feet of office space during the third quarter of this year, meaning more space went vacant than went online.

That was the first time since the first quarter of 2013, and only the second time in 17 quarters, that the Inland Empire recorded negative office absorption.

Even with that blip, the region has added nearly 157,000 square feet of office space during the past year, and its vacancy rate is down from 16.6 percent one year ago, the report stated.

Rent stayed the same between the third and second quarters, at $1.62 a square foot, but was up nearly two percent year-over-year.

While no major office projects were under construction in Riverside or San Bernardino counties during the third quarter, more than 2.4 million square feet of office development – 29 projects in all – were proposed for the region during that time, according to the report.

The Inland office market is still trying to recover from the hit it took when the recession started in 2008, but it might be much stronger than the quarterly numbers indicate, said John Ewart, senior managing director with Newmark Grubb Knight Frank’s Ontario office.

“I talk to other brokers, we talk to each other all of the time, and every one of them is busy,” Ewart said. “I can’t be certain, but I’m not sure the numbers are an accurate reflection of where the market is right now.”