July 7, 2016
Lee & Associates just released its Q2 2016 industrial market report for the Inland Empire’s East Valley market, which is dominated by manufacturing/distribution product.
Despite a lack of inventory, the market posted strong activity and gross absorption. This trend continued on the heels of the great absorption performances in 2015 of 15.3 million square feet, 2014 of 11.4 million square feet and 2013 of 14.8 million square feet.
Interestingly, the report found that speculative development is becoming much more prevalent as demand continues; however, due to the demand in the market, the impact on the vacancy rate is expected to be minimal.
Lee’s David Illsley says, “Vacancy rates have remained stable in the second quarter at 5.3%,” which is expected to continue through the rest of 2016, given continued demand and a projected moderate increase in new supply.
Other highlights include:
- Gross activity in the second quarter was more than 7.7 million square feet, with investment purchases and lease renewals accounting for 21% of the total.
- Demand for distribution buildings continues to keep pace with new supply as there are enough buyers and potential tenants in the market to absorb both existing space and new development.
- Absorption is expected to continue to be steady throughout 2016.
- Second quarter 2016’s absorption figures were over 6.1 million square feet, compared to 4.3 million square feet during the same period last year.