INDUSTRIAL ASKING RENTS STABILIZE WHILE VACANCY RATE JUMPS UP
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 average 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]
TREND
Vacancy Rates
Industrial real estate, which accounts for the vast majority of the total market share (83%), had a 5.2% vacancy rate in the fourth quarter of 2023. This represents an increase of less than one percentage point from the 4.5% vacancy rate in the fourth quarter of 2014, and is well above the prior year, when the vacancy rate was 1.1%.
Retail vacancy rates are trending downward. In the fourth quarter of 2023, retail space, which accounts for 14% of market share, had a 5.8% vacancy rate. Vacancy rates decreased more than four percentage points from 10.0% vacancy in the fourth quarter of 2014, and were down from 6.5% the prior year.
In the fourth quarter of 2023, office space, which accounts for 3% of market share, had an 8.8% vacancy rate. This is relatively unchanged from the fourth quarter of 2022 (8.6% vacancy rate). However, it is a drop of seven percentage points from the fourth quarter of 2014, when office vacancy rates were at 15.8%.
INDUSTRIAL REAL ESTATE SEES SHARP INCREASE IN VACANCY
Office, Retail, and Industrial Real Estate Vacancy Rates in Riverside-San Bernardino, 2014-2023 (Fourth Quarters)
Rents
The asking rent for industrial space stayed relatively unchanged, from $1.47/square foot in the fourth quarter of 2022 to $1.49/square foot in the fourth quarter of 2023. During this same one-year period, there was a 37% increase in industrial net absorption. At $2.00/square foot, retail asking rent decreased 7% between the fourth quarters of 2022 and 2023. Office rents increased 4% between the fourth quarters of 2022 and 2023, from $1.95 /square foot to $2.03/square foot, respectively.
INDUSTRIAL ASKING RENTS INCREASE ALMOST THREE-FOLD OVER 10 YEAR PERIOD
Office, Retail, and Industrial Real Estate Average Asking Rents in Riverside-San Bernardino, 2014-2023 (Fourth Quarters)
GEOGRAPHIC DETAIL
Rents
In the fourth quarter of 2023, industrial rent in the Riverside-San Bernardino metro area was 3% less expensive than Los Angeles County and 21% less expensive than Orange County. Office rent was 94% less expensive than Los Angeles County and 41% less expensive than Orange County. Meanwhile, retail rent was 31% less expensive than Los Angeles County and 49% less expensive in Orange County, on average.
RIVERSIDE-SAN BERNARDINO METRO AREA RENTS REMAIN BELOW REGIONAL NEIGHBORS
Office, Retail and Industrial Real Estate Average Asking Rents, Regional Comparison, Fourth Quarter 2023
[1] Net absorption is the change in occupied square feet from one period to the next.