The New York Times refers to the Inland Empire as Southern California’s backlot, because of its vast warehouse complexes and staging areas. But with the Riverside-San Bernardino region as the hottest industrial construction site in the nation, the Inland Empire is the center stage for America’s new industrial boom.
From a near-national high of 14.2 percent in October 2009, the Inland Empire unemployment rate has fallen to 6.5 percent, a 2.4 percentage-point drop from last year’s estimate of 8.9 percent, according to the state’s Employment Development Department. Current employment is now over 1.31 million jobs after bottoming out at a low of 1.14 million jobs four years ago.
The bulk of this growth has come in the last 18 months. Early in 2014, the Inland Empire cities of Riverside and San Bernardino were ranked as “Among Slowest to Recover Since Recession” for unemployment rates, median income and home prices. But those low costs sparked a new economic boom, and San Bernardino County’s job growth now only trails the Silicon Valley tech hubs of Santa Clara and San Francisco counties.
John Husing, Chief Economist for the Inland Empire Economic Partnership, told the Los Angeles Times, “We were in a hole, but we climbed the ladder and now we’re out in the sunshine.”
The big ladder out of that hole has been tens of millions of square feet of industrial, warehouse and logistics space built since 2012, and the tens of millions more that are in the process of being built. Currently the Inland Empire has 10 million square feet more under construction than any other region in America, according to CoStar, commercial real estate market research.
All commercial property sectors have seen pricing increase over the last two years. But the pricing leader has been the U.S. Industrial Index, which advanced by a red hot 11.5 percent compounded since 2013. As just reported by CoStar:
Commercial real estate space absorption soared to highest level yet in recovery. For the 12 months ended as of the second quarter of 2015, net absorption across the three major commercial property types–office, retail, and industrial–totaled 575.5 million square feet, a 39.3% increase over the 12-month period ended as of the second quarter of 2014, and the highest annual total on record since 2008.
Cushman & Wakefield industrial brokers reported that multiple sales and leasing records for the Inland Empire were broken in the second quarter ending June 2015. Over 13.5 million square feet of new leasing was signed, up from the 10.4 million square feet record in the second quarter of 2014, for a 9.2 million square feet absorption.
Industrial vacancy rates plunged by 1.5 percent over the last year, to 5.7 percent in June. The western Inland Empire vacancy rate plunged to 3.7 percent.
Brandon Birtcher, Chief Executive of Goodman Birtcher developers, told the New York Times that they recently leased 1.6 million square feet to the Georgia-Pacific Corporation and have 4.5 million square feet under construction or recently completed in the region.
With the Los Angeles-Long Beach-Anaheim region having the highest poverty rate in the nation at 17.6 percent, and California a top state contender with a 16.8 percent rate poverty rate, the Inland Empire will continue to have access to a vast reserve army of labor to drive its industrial boom.