October 7, 2016
By Dennis Kaiser
Connect Inland Empire 2016 brought together more than 300 CRE leaders for an information-packed conference at the Cal Aero Aviation Country Club in Chino, CA. The event featured a keynote conversation with Ontario International Airport Authority’s Kelly Fredericks and the County of San Bernardino’s Greg Devereaux on the future of the Inland Empire.
The airport is set to be transferred to local control next month and Fredericks is already working on ways to better serve the region, as well as better utilize 1,700 acres of airport land. He noted that there’s 700 acres of land identified for development.
During three panel discussions, top CRE leaders shared insights about what’s driving the Inland Empire markets, as well as what’s ahead. Connect Media will be sharing more in-depth reports of each panel over the coming days, but here are a few key takeaways that stand out from yesterday’s conversations:
Work, Live, Play: Job Creation, Recruiting Young Talent, and Workforce Housing
Thousands of millennials are flocking to the Inland Empire for education and employment. City planners, economic development leaders, advisors and developers discussed how owners, investors and developers can create engaging live/work/play communities to help retain young talent and sustain job growth.
- CBRE’s Joe Cesta said it is important for developers to think about where the “employee of the future wants to work.” CBRE deployed a hybrid Workplace360 strategy in the Inland Empire and that is “enhancing its ability to recruit talent.”
- The City of Chino’s Christopher Kennedy said that as a result of stronger employment fundamentals and a higher skilled workforce, Inland Empire workers are now “looking for their next better job.”
- G.H. Palmer Associates’ Darrel Malamut said today’s residents are looking for more than a place to sleep. “Amenities are huge, especially with the younger generation that spends more time out of their unit than in their units.”
Economic & Investment Update: The Future of the Region
With interest rate uncertainty, the presidential election, Brexit and more, the economy is in a precarious state. Brokers, developers and investors shared insights on the future of CRE in the region, and how to navigate the changing tides.
- Marcus & Millichap’s Kevin Boeve said the Inland Empire is “well positioned to weather any downturn” because of its demographics, job growth, job diversity, wage growth and infrastructure growth.” He pointed out that the labor force of the Inland Empire is now larger than those in the states of Nevada, Oklahoma, Utah, and the city of San Diego.
- CBRE’s Mike Kendall said this year is the first in his 25-year CRE career that Los Angeles is No. 1 on the list of investments for all product types. “That’s why demand is up locally [in the Inland Empire]. The industrial product is ‘white hot’ for the institutional investor sector.”
Development Hurdles and Process Shifts
Developers are facing big challenges and legal changes, which means the process of bringing new places to life must adjust. Development experts and respected land-use attorneys led a conversation to explain how projects can navigate the development process in the coming year.
- Trammell Crow Co.’s Tom Bak said, “This is the best cycle any of us has ever had.” Now is the time for a “gut check” to see if “we’re doing a good job to manage our relationships.” He felt the timing is right in this” cycle to focus building relationships.” That includes the community, lending partners, as well as its own team.
- Hillwood Investment Properties’ John Magness noted that the Inland Empire is in the “best cycle it has been in in years,” though it will require “adult leadership” on the capital side to continue. He pointed out that supply and demand are “pretty balanced” now, making it a good time to be a developer in the region, “if you can find land and be patient.”
- The City of Moreno Valley’s Mike Lee said the city is finding ways to “facilitate development, yet be responsible. We see it as a partnership.” The city has adopted a “holistic approach” to find solutions. The city is even transitioning to an online system that will help streamline the process for developers and occupiers.
- The Rockefeller Group’s Marc Berg explained that the Inland Empire market cycle “feels like a triple header,” and strong demand is helping to offset challenges. He noted that there are “significant challenges” facing the region. One such challenge is the CEQA lawsuits, as unions seek PLA’s, which ultimately “run up hard costs 12% on average,” and can slow down the development process by months and years at a time.
For comments, questions or concerns, please contact Dennis Kaiser