Commercial Real Estate Market

Rent Prices Rise in Two of Three Commercial Real Estate Markets

Changes in commercial real estate vacancy rates, rents, and net absorption reflect the health of the market, as well as opportunities for business expansion. Lower vacancy rates, increasing net absorption, and increasing rents can signal a need for investments in new facilities, thus stimulating construction and related building activities. This indicator tracks rental prices and vacancy rates for office, retail, and industrial real estate. It also tracks net absorption of industrial real estate, which comprises the largest share of market space available in the region and is a key indicator of overall market health. 1

Changes in commercial real estate vacancy rates, rents, and net absorption reflect the health of the market, as well as opportunities for business expansion.

How is San Bernardino County Doing?

Office, Retail and Industrial Real Estate Vacancy Rates

Riverside-San Bernardino, 2009-2018 (Fourth Quarters)
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Source: CBRE

Office, Retail and Industrial Real Estate Asking Rents

Regional Comparison, 2018 (Fourth Quarter)
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Source: CBRE

Industrial rents in the Riverside-San Bernardino metro area continue to rise, while the vacancy rates remained the same from the prior year:

  • Industrial real estate, which accounts for the vast majority of the total market share (79%), had a 3.7% vacancy rate in the fourth quarter of 2018.
  • This represents a decrease of 5.3 percentage points from a 9.0% vacancy rate in the fourth quarter of 2009, but is the same as the vacancy rate from the prior year.
  • The asking rent for industrial space continues to increase, from $0.53/square foot in the fourth quarter of 2017 to $0.57/square foot in the fourth quarter of 2018.
  • There was a 37% increase in industrial net absorption between the fourth quarters of 2017 and 2018.

Retail vacancy rates increased while rents decreased:

  • In the fourth quarter of 2018, retail space, which accounts for 17% of market share, had an 8.3% vacancy rate.
  • Despite this slight increase from the prior year (8.2% vacancy rate), vacancy rates have decreased 3.5 percentage points from the peak of 11.8% vacancy in the fourth quarter of 2009.
  • At $2.03/square foot, retail asking rent decreased 3% between the fourth quarters of 2017 and 2018.

Office vacancy rates declined while rents increased:

  • In the fourth quarter of 2018, office space, which accounts for 4% of market share, had an 8.9% vacancy rate.
  • This is a decrease from the fourth quarter of 2017 (10.9% vacancy rate) and a drop of more than 15 percentage points since the peak of 24.3% vacancy in the fourth quarter of 2009.
  • Between the fourth quarters of 2017 and 2018, office rents increased 1%, from $1.92/square foot in the fourth quarter of 2017 to $1.94/square foot in the fourth quarter of 2018.

Across all categories of commercial real estate, rents in the Riverside-San Bernardino are comparatively low:

  • In the fourth quarter of 2018, on average, industrial rent in Los Angeles and Orange counties was 57% more expensive than comparable space in the Riverside-San Bernardino metro area. Office rent was 63% more expensive and retail rent was 20% more expensive, on average.

Office, Retail and Industrial Real Estate Asking Rents

Riverside-San Bernardino, 2009-2018 (Fourth Quarters)
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Source: CBRE

1Net absorption is the change in occupied square feet from one period to the next.