///////////////L o s A n g e l e s ///////////// ///////////O r a n g e C o u n t y /////////// ////////////V e n t u r a ///////////////// ////////// I n l a n d E m p i r e //////////// Market Report ///////// Inland Empire Industrial West / / / / /////P h o e n i x ///////////////// Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental www.daumcommercial.com O N C O R INTERNATIONAL
MARKET REPORT Industrial Inland Empire West MARKET ACTIVITY KEY TAKE AWAYS ECONOMIC OUTLOOK MARKET D Direct Vacancy 2.9% Net Absorption -295,876 SF Vacancy Rate: Marginally increased in. Net Absorption: Ended negative for first time in seven quarters. U.S. Employment 3.9% U6 Rate 7.6% Gross Absorption: Fall nearly 5% in from Q3. Industrial Supply: Over 6.1 million square feet were V Overall Vacancy 3.1% Gross Absorption delivered in. Under construction activity jumps to 9.8 million square feet, proving this market continues to grow & fulfil the large demand. 3,19,23 SF Interest Rate 4.6% (3 year fixed) Changing GDP 2.8% ECONOMIC OUTLOOK Under Construction 9,854,619 SF Sale Price Change -9.2% Rental Rates (NNN) $.68 Deal Volume -71.1% Interest Rates: The Fed is anticipating two (2) hikes in 219; increasing borrowing costs. Trade: Tensions remain with China. USMCA still awaiting congressional ratification. Stock Market: Increased volatility, but corporate fundamentals remain strong. Oil: Crude Oil dropped 39% in. Prices expected to remain low due to over-supply. Reduced transportation costs should benefit markets further away from ports. Port Traffic Y/Y Δ 1.5% Inflation Change +1.9% NYSE Performance -14.4% 1 Yr. - 2 Yr. Spread 15 BPS EXPERIENCE IN A CHANGING MARKET @DAUMCOMMERCIAL express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental www.daumcommercial.com O N C O R INTERNATIONAL
Inland Empire Industrial //// OVERALL VACANCY Overall vacancy slightly increases in NET ABSORPTION TURNS NEGATIVE FOR 1ST TIME IN 7 QUARTERS Direct Vacancy Total Vacancy Historical Average Net Absorption SF Direct Overall Vacancy 9.% 7.% 5.% 3.% 1.% 7,, 5,, 3,, 1,, -1,, - -3,, 9.% 7.% 5.% 3.% 1.% GROSS ABORPTION DROPS SIGNIFICANTLY BELOW HIST. AVERAGE ASKING RENTS AT ALL TIME HIGHS Gross Absorption SF Total Historical Average NNN Rent Direct Overall Vacancy 1 1,, 8,, $.8 $.7 $.6 $.5 $.4 $.3 $.2 9.% 7.% 5.% 3.% 1.%
Inland Empire Industrial //// LEASING ACTIVITY MARGINALY INCREASES IN CONSTRUCTION ACTIVITY REMAINS STRONG WITH UPTICK IN Leasing Activity SF Direct Leasing Activity SF Sublet Under Construction SF 1 1,, 8,, 1 1 1 1,, 8,, $1,2,, $1,,, $8,, $6,, $4,, $2,, $ SALE PRICES DIP ON LOW SALES VOLUME Chino Mira Loma/Jurupa Valley Ontario Rialto Fontana Montclair/Upland Rancho Cucamonga Med. Price PSF $18. $16. $14. $12. $1. $8. $6. $4. $2. $.
Chino Fontana Mira Loma/ Jurupa Valley Montclair/ Upland Ontario Rancho Cucamonga Rialto Chino Fontana Mira Loma/ Jurupa Valley Montclair/ Upland Ontario Rancho Cucamonga Rialto Chino Fontana Mira Loma/ Jurupa Valley Montclair/ Upland Ontario Rancho Cucamonga Rialto Inland Empire Industrial //// SQUARE FOOT BREAKDOWN 329,97,964 SF MARKET SIZE VACANCY BREAKDOWN 12% 8% 16% 19% Chino Fontana Mira Loma/ Jurupa Valley Montclair/ Upland Ontario 7.% 5.% 3.% 1.% Direct Vacancy Rate 3.29% 2.87% 2.57% Overall Vacancy Rate 4.61% 3.29% 3.89% 3.5% 2.44% 1.74% 2.34% 6.31% 33% 9% 3% Rancho Cucamonga Rialto AVERAGE RENT PSF VOLUME BREAKDOWN Average Industrial Rent Sales Volume Price PSF $.8 $.78 $.76 $.74 $.72 $.7 $.68 $.66 $.64 $.62 $.78 $.69 $.68 $.7 $.7 $.73 $.7 $12,,. $1,,. $8,,. $6,,. $4,,. $2,,. $. $25. $2. $15. $1. $5. $.
///////////////L o s A n g e l e s ///////////// ///////////O r a n g e C o u n t y /////////// ////////////V e n t u r a ///////////////// ////////// I n l a n d E m p i r e //////////// Market Report ///////// Inland Empire Industrial East / / / / /////P h o e n i x ///////////////// Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental www.daumcommercial.com O N C O R INTERNATIONAL
MARKET REPORT Industrial Inland Empire East MARKET ACTIVITY KEY TAKE AWAYS ECONOMIC OUTLOOK MARKET D Direct Vacancy 6.7% Net Absorption 2,539,583 SF Vacancy Rate: Increases for 2nd consecutive V Overall Vacancy 7.% Gross Absorption 5,41,179 SF quarter. Net Absorption: Dropped in from Q3, but still remains strong. Gross Absorption: Decreased slightly in. All quarters in had levels above historic average. Asking Rents: Pushed to record highs again in. Industrial Supply: The East market continues historic expansion. Over 13.1 million square feet were delivered in, with 11.2 million UC. U.S. Employment 3.9% Interest Rate 4.6% (3 year fixed) U6 Rate 7.6% Changing GDP 2.8% ECONOMIC OUTLOOK Under Construction 11,262,293 SF Sale Price Change -1.2% Rental Rates (NNN) $.64 Deal Volume -39.6% Interest Rates: The Fed is anticipating two (2) hikes in 219; increasing borrowing costs. Trade: Tensions remain with China. USMCA still awaiting congressional ratification. Stock Market: Increased volatility, but corporate fundamentals remain strong. Oil: Crude Oil dropped 39% in. Prices expected to remain low due to over-supply. Reduced transportation costs should benefit markets further away from ports. Port Traffic Y/Y Δ 1.5% Inflation Change +1.9% NYSE Performance -14.4% 1 Yr. - 2 Yr. Spread 15 BPS EXPERIENCE IN A CHANGING MARKET @DAUMCOMMERCIAL express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental www.daumcommercial.com O N C O R INTERNATIONAL
Inland Empire Industrial //// OVERALL VACANCY Overall vacancy increases, but remains below average NET ABSORPTION LOWEST OF BUT STILL STRONG Direct Vacancy Total Vacancy Historical Average Net Absorption SF Direct Overall Vacancy 2 1 1 1 1 5,, 3,, 1,, -1,, - 2 1 1 1 1 GROSS ABORPTION DROPS IN ASKING RENTS PUSH RECORD HIGHS Gross Absorption SF Total Historical Average NNN Rent Direct Overall Vacancy 9,, 8,, 7,, 5,, 3,, 1,, $.7 $.65 $.6 $.55 $.5 $.45 $.4 $.35 $.3 $.25 $.2 2 1 1 1 1
Inland Empire Industrial //// LEASING ACTIVITY DECLINES CONSTRUCTION ACTIVITY ABOVE 11M SF Leasing Activity SF Direct Leasing Activity SF Sublet Under Construction SF 8,, 7,, 5,, 3,, 1,, 25,, 2,, 15,, 1,, 5,, SALE PRICES CONTINUE TO PUSH HISTORIC LEVELS Colton Corona/Norco Moreno Valley Perris Redlands Riverside San Bernardino Med. Price PSF $6,, $5,, $4,, $3,, $2,, $1,, $ $14. $12. $1. $8. $6. $4. $2. $.
Inland Empire Industrial //// SQUARE FOOT BREAKDOWN 211,254,346 SF MARKET SIZE VACANCY BREAKDOWN 5% 19% Colton 15% 13% 23% Corona/Norco Moreno Valley Perris Redlands Riverside 1 1 Direct Vacancy Rate Overall Vacancy Rate 5.51% 5.21% 3.73% 11.71% 11.% 9.81% 3.96% 3.1% 7.36% 7.26% 6.58% 13% 12% San Bernardino AVERAGE RENT PSF VOLUME BREAKDOWN Average Industrial Rent Sales Volume Price PSF $.78 $.76 $.74 $.72 $.7 $.68 $.66 $.64 $.62 $.6 $.58 $.66 $.77 $.69 $.67 $.65 $.67 $.65 $3,,. $25,,. $2,,. $15,,. $1,,. $5,,. $. $25. $2. $15. $1. $5. $.
National Economic Overview //// GDP GROWS 2.7% IN 4TH QUARTER Real GDP Average Real GDP 1% 8% 6% 4% 2% % -2% -4% -6% -8% -1% ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 5,, 4,5, 3,5, 3,, 2,5, 1,5, 1,, 5, PORT ACTIVITY IS AT AN ALL-TIME HIGH Imports Exports Empties 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q *2.8% for 4Q18 based on Fed Reserve Bank of Atlanta "GDP Now" Forecast UNEMPLOYMENT CONTINUES DOWNWARD TREND MOST INDUSTRY SECTORS CONTINUE TO SEE GROWTH Recession U6 Rate Official Rate 18% 16% 14% 12% 1% 8% 6% 4% 2% % ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 Government Other Services Leisure and Hospitality Education and Health Services Professional and Business Services Financial Activities Information Utilities Transportation and Warehousing Retail Trade Wholesale Trade Manufacturing Construction Mining and Logging 7 16 14 147 143 17 1 2.5 57.8 53.1 23.3 88 69 8 25 5 75 1 125 15 175
National Economic Overview //// INFLATION REMAINS IN CHECK INTEREST RATES Recession CPI All Item Less Food & Energy Fed Inflation Target 6% 5% 4% 3% 2% 1% % -1% -2% '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 Recessions 1-Yr Treasury Rates Federal Funds Rate 3-Yr. Fixed Rate Mortgage 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 NYSE SEES 14.45% DIP IN 4TH QUARTER BOND SPREAD CONTINUES TO NARROW 15 BASIS POINTS Recession DOW Jones S&P 5 NASDAQ Recession Bond Spread 15% 1% 5% % -5% -1% -15% ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 3.% 2.5% 2.% 1.5% 1.%.5%.% -.5% -1.% ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18
Inland Empire Industrial //// METHODOLOGY & TERMINOLOGY Methodology Industrial and flex (R & D) buildings that are 5, square feet and greater. Direct Vacant SF Space that is vacant and ready for occupancy by a user. The space is being offered for lease or sale directly from the landlord. Total Vacant W/ Sublet SF Space that is vacant and ready for occupancy by a user. The space is being offered for lease or sale by the landlord or for sublease by the current tenant. Direct Vacancy Rate Total vacant direct space (vacant space for lease or sale from the landlord or owner) divided by the total rentable square footage for existing buildings only. Vacancy W/ Sublet Rate Total vacant direct space and sublease space divided by the total rentable square footage for existing buildings only. Gross Absorption The total change in occupied space over a given period of time, counting space that is occupied but not space that is vacated by tenants. Gross absorption differs from leasing activity, which is the sum of all space leased over a certain period of time. Net Absorption The net change in occupied space over a given period of time, calculated by summing all the positive changes in occupancy (move ins) and subtracting all the negative changes in occupancy (move outs). Under Construction Planned buildings for which construction has started but have not yet been granted a Certificate of Occupancy. Planned buildings are not included. Completed in New buildings with original construction completed in the year and granted a Certificate of Occupancy. Renovated buildings are not included DAUM OFFICES LOS ANGELES, CALIFORNIA 81 S. Figueroa Street, Suite 6 Los Angeles, CA 917 213-626-911 LOS ANGELES NORTH, CALIFORNIA 2182 Burbank Boulevard, Suite 21 Woodland Hills, CA 91367 818-887-36 SANTA CLARITA VALLEY, CALIFORNIA 28494 Westinghouse Place, Suite 312 Valencia, CA 91355 661-75-2299 SAN GABRIEL VALLEY, CALIFORNIA 13181 Crossroads Pkwy. N, Suite 1 City of Industry, CA 91746 562-695-7244 SOUTH BAY, CALIFORNIA 125 W. 19th Street, Suite 42 Gardena, CA 9248 31-538-67 MID-COUNTIES, CALIFORNIA 1381 Cerritos Corporate Drive, Suite C Cerritos, CA 973 562-27-33 ORANGE COUNTY, CALIFORNIA 44 MacArthur Boulevard, Suite 95 Newport Beach, CA 9266 949-724-19 VENTURA & SANTA BARBARA, CALIFORNIA 751 Daily Drive, Suite 15 Camarillo, CA 931 85-987-8866 INLAND EMPIRE, CALIFORNIA 3595 E. Inland Empire Boulevard, Bldg. 5 Ontario, CA 91764 99-98-1234 PHOENIX ARIZONA 172 E. Highland Avenue, Suite 12 Phoenix, AZ 8516 62-957-73