Riverside and San Bernardino counties continue to have the highest office vacancy rates in the Southern California region in the wake of the Great Recession, but industrial space in the Inland Empire remains in high demand, according to an annual survey released today.
According to the University of Southern California's Casden Industrial and Office Forecast 2012, inland office buildings cannot fill one-fifth of their space, putting a drag on rents.
The forecast showed that the 21.1 percent market-wide vacancy rate rivals rates in neighboring counties. Orange County, for example, had a 16.6 percent rate.
"A building boom has begun once again in the Inland Empire and could temper the improvements in rents and vacancy rates that otherwise would have occurred," said Tracey Seslen, the study's author. "The magnitude of the changes will also depend on manufacturing output, oil prices, U.S. monetary and fiscal policy, and sovereign risk in Europe."
Between the third quarter of 2011 and the third quarter of this year, the office market experienced a 3.6 percent drop in rents, for an average rent of $1.85 per square foot, according to the forecast.
The decline, however, compared to a 6.3 percent slip from Q3 2010 to Q3 2011. In the industrial market, space isn't widely available. The vacancy rate for warehouses and similar commercial structures fell 1.7 percentage points in the last year to 4.9 percent, according to the study.
That dovetailed with an increase in asking rents for inland-area industrial space, which goes for an average 35 cents per square foot, compared to 33 cents in 2011. Research for the Casden Industrial and Office Forecast was provided by the Torrance-based Hoyt Organization.