Rent Prices Increase in 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
How is San Bernardino County Doing?
TREND
Vacancy Rates
Industrial real estate, which accounts for the vast majority of the total market share (80%), had a 4.1% vacancy rate in the fourth quarter of 2019. This represents a decrease of 2.8 percentage points from a 6.9% vacancy rate in the fourth quarter of 2010, and is slightly higher than the prior year, when the vacancy rate was 3.7%.
Retail vacancy rates are also trending downward. In the fourth quarter of 2019, retail space, which accounts for 16% of market share, had an 8.1% vacancy rate. Vacancy rates decreased almost three percentage points from 11.0% vacancy in the fourth quarter of 2010.
In the fourth quarter of 2019, office space, which accounts for 4% of market share, had a 9.0% vacancy rate. This is a slight increase from the fourth quarter of 2018 (8.9% vacancy rate). However, it is a drop of almost 15 percentage points from the fourth quarter of 2010, when office vacancy rates were at 23.5%.
VACANCY RATES DECREASING ACROSS THE THREE MARKETS
Office, Retail, and Industrial Real Estate Vacancy Rates in Riverside-San Bernardino, 2012-2021 (Fourth Quarters)
Rents
The asking rent for industrial space is increasing, from $0.57/square foot in the fourth quarter of 2018 to $0.61/square foot in the fourth quarter of 2019. During this same one-year period, there was a 19% decrease in industrial net absorption. At $2.12/square foot, retail asking rent increased 4% between the fourth quarters of 2018 and 2019. Office rents also increased between the fourth quarters of 2018 and 2019, rising 6%, from $1.94/square foot to $2.05/square foot, respectively
ASKING RENT INCREASING ACROSS THE THREE MARKETS
Office, Retail and Industrial Real Estate Asking Rents in Riverside-San Bernardino, 2012-2021 (Fourth Quarters)
GEOGRAPHIC DETAIL
In the fourth quarter of 2019, on average, industrial rent in Los Angeles and Orange counties was 60% more expensive than comparable space in the Riverside-San Bernardino metro area. Office rent was 58% more expensive and retail rent was 29% more expensive, on average.
RENTS IN THE RIVERSIDE-SAN BERNARDINO METRO AREA ARE COMPARATIVELY LOW
Office, Retail and Industrial Real Estate Asking Rents, Regional Comparison, Fourth Quarter 2021