Commercial Real Estate Market

Rents Rise as Vacancy Rates Decline

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, 2008-2017 (Fourth Quarters)
loading image used for graphLoading

Source: CBRE

Industrial rents in the Riverside-San Bernardino metro area continue to rise, while the vacancy rates continue to decline:

  • 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 2017.
  • This represents a decrease of 5.3 percentage points since the peak of 9.4% vacancy in the fourth quarter of 2008 and a modest decrease from the prior year, when the vacancy rate for industrial space was 4.0%.
  • The asking rent for industrial space continues to increase, from $0.51/square foot in the fourth quarter of 2016 to $0.53/square foot in the fourth quarter of 2017.
  • There was a 33% increase in industrial net absorption between the fourth quarters of 2016 and 2017.

Office, Retail and Industrial Real Estate Asking Rents

Regional Comparison, Fourth Quarter 2017
loading image used for graphLoading

Source: CBRE

Retail rents increased while vacancy rates decreased:

  • In the fourth quarter of 2017, retail space, which accounts for 17% of market share, had an 8.2% vacancy rate.
  • Vacancy rates have decreased more than three and a half percentage points from the peak of 11.8% vacancy in the fourth quarter of 2009.
  • At $2.10/square foot, retail asking rent increased 5% between the fourth quarters of 2016 and 2017.

Similar to industrial and retail space, office vacancy rates have declined while rents increased:

  • In the fourth quarter of 2017, office space, which accounts for 4% of market share, had a 10.9% vacancy rate.
  • This represents a decrease of more than 13 percentage points since the peak of 24.3% vacancy in the fourth quarter of 2009.
  • Between the fourth quarters of 2016 and 2017, office rents increased 3%, from $1.87/square foot in the fourth quarter of 2016 to $1.92/square foot in the fourth quarter of 2017.

Office, Retail and Industrial Real Estate Asking Rents

Riverside-San Bernardino, 2008-2017 (Fourth Quarters)
loading image used for graphLoading

Source: CBRE

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

  • In the fourth quarter of 2017, on average, industrial rents in Los Angeles and Orange counties were 58% more expensive than comparable space in the Riverside-San Bernardino metro area. Office rents were 60% more expensive and retail rents were 19% more expensive, on average.
1Net absorption is the change in occupied square feet from one period to the next.