INDUSTRIAL MARKET REPORT Inland Empire 4th Quarter 2016 Produced in partnership with
Table of Contents/ Methodology of Tracked Set Xceligent is a leading provider of verified commercial real estate information which assists real estate professionals, appraisers, owners, investors and developers that make strategic decisions to lease, sell, buy and develop commercial properties. Table of Contents and Methodology/Map 2-3 Market Overview 4-5 Statistics by Market 6 Vacancy Rates & Asking Rates 7-8 Leasing & Absorption 9 New Construction 10 Industrial Advisory Board Members 11 Xceligent Team 12 The Inland Empire tracked set consists of an inventory of buildings considered to be competitive by Tracked Inventory (Industrial) The total square feet (sf) of all existing single and multi tenant industrial properties greater than 10,000 sf. Flex/R&D buildings with an office build out greater than 30% and a parking ratio greater than 3:1,000 are excluded. Direct vacant (sf) The total of the vacant square footage in a building that is being marketed by an agent representing the landlord. Net Absorption The net change in physically occupied space from quarter to quarter, expressed in square feet. Sublease (sf) Space that is offered for lease by a current tenant, or his agent, within a property. Whether the tenant is paying rent or not, the space is considered vacant only if it is unoccupied. Total Available (sf) All of the available leasable space within a building, whether it is occupied or vacant, for direct lease or sublease space. Total Vacant (sf) The total of all of the vacant square footage within a building, including both direct and sublease space. 2
Industrial Market Map 3
Inland Empire Industrial Overview Overview The Inland Empire industrial market closed out the fourth quarter of 2016 with 2,884,724 square feet (sf) of positive net absorption and 9,398,069 sf year-to-date. At 3.5%, the Inland Empire vacancy rate is slightly higher than the 3.2% reported in the fourth quarter of 2015. Despite a slight uptick, 19.6 million sf was delivered in 2016. Of this, 11.4 million sf has already been absorbed. Development activity continues to thrive with 21.2 million sf of new construction underway. With the largest lease of the quarter, Bob s Discount Furniture occupied 806,322 sf at the San Bernardino Logistics Center. # of Bldgs Inventory (sf) Total Available (sf) Total Vacant (sf) Total Vacancy Rate Total Quarterly Net (%) Absorption (sf) YTD Total Net Absorption (sf) Inland Empire East 2,816 219,478,285 17,893,534 12,518,778 5.7% 1,289,368 7,690,306 Whse/Mfg Class A 438 114,888,403 14,350,356 11,004,732 9.6% 1,413,681 6,554,737 Whse/Mfg Class B 1,231 70,371,771 2,267,394 1,108,311 1.6% -179,695 336,872 Whse/Mfg Class C 1,147 34,218,111 1,275,784 405,735 1.2% 55,382 798,697 Inland Empire West 3,487 283,073,971 12,538,517 4,997,234 1.8% 1,595,356 1,707,763 Whse/Mfg Class A 649 112,189,661 6,703,148 3,027,965 2.7% 899,356 1,483,910 Whse/Mfg Class B 2,056 147,618,191 5,238,131 1,747,834 1.2% 685,596-2,459 Whse/Mfg Class C 782 23,266,119 597,238 221,435 1.0% 10,404 226,312 Overall 6,303 502,552,256 30,432,051 17,516,012 3.5% 2,884,724 9,398,069 # of Bldgs Inventory (sf) Direct Available (sf) Direct Vacant (sf) Direct Vacancy Rate (%) Direct Quarterly Net Absorption (sf) YTD Direct Net Absorption (sf) Inland Empire East 2,816 219,478,285 16,486,336 12,199,247 5.6% 1,591,759 7,706,672 Whse/Mfg Class A 438 114,888,403 13,557,555 10,785,924 9.4% 1,632,489 6,612,750 Whse/Mfg Class B 1,231 70,371,771 1,995,225 1,007,588 1.4% -96,112 309,423 Whse/Mfg Class C 1,147 34,218,111 933,556 405,735 1.2% 55,382 784,499 Inland Empire West 3,487 283,073,971 10,478,672 4,964,044 1.8% 1,602,447 1,604,497 Whse/Mfg Class A 649 112,189,661 4,915,078 3,027,965 2.7% 899,356 1,483,910 Whse/Mfg Class B 2,056 147,618,191 4,966,356 1,714,644 1.2% 695,386-105,725 Whse/Mfg Class C 782 23,266,119 597,238 221,435 1.0% 7,705 226,312 Overall 6,303 502,552,256 26,965,008 17,163,291 3.4% 3,194,206 9,311,169 # of Bldgs Inventory (sf) Available Sublease (sf) Sublease Vacant (sf) Sublease Vacancy Rate (%) Sublease Quarterly Absorption (sf) YTD Sublease Net Absorption (sf) Inland Empire East 2,816 219,478,285 1,407,198 319,531 0.1% -302,391-16,366 Whse/Mfg Class A 438 114,888,403 792,801 218,808 0.2% -218,808-58,013 Whse/Mfg Class B 1,231 70,371,771 272,169 100,723 0.1% -83,583 27,449 Whse/Mfg Class C 1,147 34,218,111 342,228-0.0% 0 14,198 Inland Empire West 3,487 283,073,971 2,059,845 33,190 0.0% -7,091 103,266 Whse/Mfg Class A 649 112,189,661 1,788,070-0.0% 0 0 Whse/Mfg Class B 2,056 147,618,191 271,775 33,190 0.0% -9,790 103,266 Whse/Mfg Class C 782 23,266,119 - - 0.0% 2,699 0 Overall 6,303 502,552,256 3,467,043 352,721 0.1% (309,482) 86,900 4
Inland Empire Industrial Overview Historical Vacancy Rate & Net Absorption Absorption Vacancy 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000-4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Historical Vacancy Rates by Class Whse/Mfg Class A Whse/Mfg Class B Whse/Mfg Class C 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 6,500,000 5,500,000 4,500,000 3,500,000 2,500,000 1,500,000 500,000 (500,000) Historical Net Absorption by Class Whse/Mfg Class A Whse/Mfg Class B Whse/Mfg Class C 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 5
Statistics by Market # of Bldgs Inventory (sf) Total Vacant (sf) Sublease Vacant (sf) Vacancy Rate (%) Total Quarterly Absorption (sf) YTD Total Net Absorption (sf) Inland Empire East 2,816 219,478,285 12,518,778 319,531 5.7% 1,289,368 7,690,306 10,000-24,999 sf 1,468 23,106,662 300,400 0 1.3% 65,364 287,129 25,000-49,999 sf 604 21,015,302 365,823 0 1.7% 150,276 194,597 50,000-99,999 sf 334 22,782,132 802,360 22,500 3.5% -145,681-325,282 100,000-249,999 sf 218 32,220,672 918,997 297,031 2.9% -327,431 692,383 250,000-499,999 sf 87 32,206,206 3,155,745 0 9.8% 86,321 1,701,883 500,000-749,999 sf 51 31,604,868 3,836,304 0 12.1% 654,197 2,127,632 Greater than 750,000 sf 54 56,542,443 3,139,149 0 5.6% 806,322 3,011,964 Inland Empire West 3,487 283,073,971 4,997,234 33,190 1.8% 1,595,356 1,707,763 10,000-24,999 sf 1,654 25,704,732 198,525 0 0.8% 66,720 136,029 25,000-49,999 sf 711 24,592,378 569,838 33,190 2.3% -55,419-31,511 50,000-99,999 sf 411 28,651,801 236,344 0 0.8% 163,415 157,120 100,000-249,999 sf 415 62,964,359 1,021,132 0 1.6% 101,911 350,591 250,000-499,999 sf 204 73,068,701 1,333,341 0 1.8% 702,178 1,176,319 500,000-749,999 sf 55 33,515,231 900,442 0 2.7% 616,551 307,345 Greater than 750,000 sf 37 34,576,769 737,612 0 2.1% 0-388,130 Overall 6,303 502,552,256 17,516,012 352,721 3.5% 2,884,724 9,398,069 6
Vacancy Rates & Asking Rates Vacancy Rate % Weighted Average Asking Rent (NNN) 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 Inland Empire East 5.6% 5.7% 5.7% 6.0% 5.7% $0.44 $0.41 $0.45 $0.46 $0.48 Whse/Mfg Class A 8.8% 9.1% 9.0% 10.3% 9.6% $0.40 $0.39 $0.39 $0.42 $0.42 Whse/Mfg Class B 2.0% 1.3% 1.6% 1.3% 1.6% $0.45 $0.44 $0.48 $0.49 $0.52 Whse/Mfg Class C 3.5% 4.0% 3.3% 1.3% 1.2% $0.97 $0.41 $0.85 $0.83 $0.72 Inland Empire West 1.3% 1.7% 1.1% 2.2% 1.8% $0.51 $0.55 $0.59 $0.60 $0.59 Whse/Mfg Class A 1.3% 2.4% 0.8% 3.1% 2.7% $0.49 $0.53 $0.53 $0.53 $0.55 Whse/Mfg Class B 1.2% 1.1% 1.1% 1.6% 1.2% $0.55 $0.54 $0.60 $0.60 $0.63 Whse/Mfg Class C 1.9% 2.5% 2.3% 1.0% 1.0% $0.50 $0.59 $0.79 $0.79 $1.00 Overall 3.2% 3.4% 3.1% 3.8% 3.5% $0.47 $0.45 $0.51 $0.51 $0.51 7
Vacancy Rates & Asking Rates 5.7% Vacancy Rate by Market 1.8% Inland Empire East Inland Empire West Weighted Average Asking Rent by Market (NNN) $0.48 $0.59 Inland Empire East Inland Empire West $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 Asking Rent Range by Class (NNN) $1.00 $1.00 $0.73 $0.65 $0.65 $0.56 $0.45 $0.43 $0.31 Whse/Mfg Class A Whse/Mfg Class B Whse/Mfg Class C 8
Leasing & Absorption Largest Leases & Absorption Changes Property Name Occupied or Vacated (sf) Tenant Name Submarket Specific Use 6227 Cajon Blvd, San Bernardino 806,322 Bob's Discount Furniture Inland Empire East Whse/Mfg Class A 13053 San Bernardino Ave, Fontana 616,551 Ozburn-Hessey Logistics Inland Empire West Whse/Mfg Class A 1590 N Tamarind Ave, Rialto 543,400 XPO Logistics, Inc. Inland Empire East Whse/Mfg Class A 27573 River Bluff Ave, Redlands 542,977 Burlington Coat Factory Inland Empire East Whse/Mfg Class A 11250 Poplar Ave, Fontana 444,669 Go Plus, Inc. Inland Empire West Whse/Mfg Class A 13521 Santa Ana Ave, Fontana 423,460 DCG Fulfillment Inland Empire West Whse/Mfg Class B 2415 N Locust Ave, Rialto 401,914 The Hillman Group Inland Empire East Whse/Mfg Class A 2255 W San Bernardino Ave, Redlands -207,114 KPower Global Logistics Inland Empire East Whse/Mfg Class A 3392 Mike Daley Dr, San Bernardino -218,808 ES3 Inland Empire East Whse/Mfg Class A 13366 Philadelphia St, Fontana -266,950 Harman International Industries, Inc. Inland Empire West Whse/Mfg Class B 9050 Hermosa Ave, Rancho Cucamonga -468,682 Amaxi Foods Inland Empire West Whse/Mfg Class A Top Transactions Property Name Sale Price Sold (sf) Buyer Seller Submarket Specific Use 6227 Cajon Blvd, San Bernardino $68,537,370 806,322 Waterstone Northeast 12320 4th St, Rancho Cucamonga $24,400,000 283,792 Rexford Industrial 1730 Eastridge Ave, Riverside $17,923,500 115,400 Calavo Growers Inc TIAA CREF Inland Empire East Whse/Mfg Class A Allen Commercial Realty Ltd Campus Opco LLC and Fresh Foods LLC Inland Empire West Inland Empire East Whse/Mfg Class B Whse/Mfg Class A 9
New Construction Current Construction by Market 12,000,000 11,500,000 11,502,316 11,000,000 10,500,000 10,000,000 9,787,527 9,500,000 9,000,000 8,500,000 Inland Empire East Inland Empire West 10
Industrial Advisory Board Members Inland Empire CBRE Dave Consani Jim Koenig Colliers International Mark Zorn Josh Hayes Daum Commercial Rick John Gus Andros JLL Mike McCrary Ruben Goodsell Patrick Wood Lee & Associates Majestic Realty Co NAI Capital NGKF Michael Chavez Kyle Valley Nick Chang Mark Kegans Ron Washle Strata Realty Voit Tim Hawke Walt Chenoweth 11
Xceligent Inland Empire Team This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy. For more information, please contact : Matt Nelson Director of Analytics 714-509-1404 mnelson@xceligent.com Monique Ebel Director of Research 714-538-8432 mebel@xceligent.com Sean Pullin Sales Executive 714-855-5801 spullin@xceligent.com Tim Hayes Executive Director - AIR 213-687-8777 thayes@airea.com Michael Foxworthy VP of National Accounts 805-807-6291 mfoxworthy@xceligent.com Brad Hauser VP of Analytics - Western Region 281-782-3944 bhauser@xceligent.com Produced in partnership with 12