Inland Empire industrial property development buoyed by SoCal ports
The steady up tick in container traffic through Southern California ports may forestall a slowdown in the Inland Empire industrial real estate market that is beginning to materialize in other areas of the country.
Industrial property speculators have saturated the market throughout the country, and according to experts, some markets will move into areas of excess supply within the next 12 to 18 months.
'Of all property classes, the industrial market is the most sensitive to new supply right now,' Bob Bach, director of market research at Oak Brook, Ill.-based Grubb & Ellis told the National Real Estate Investor. 'These facilities go up fast, and in places like Chicago the market just keeps expanding out, which opens up more viable sites.'
Chicago industrial property vacancies, at 8.2 percent, are running 50 basis points above the national average, making any new development a tough sell.
In addition, experts fear that the excess supply could hamper rental rate increases, particularly in a market segment where developers can develop new properties quickly.
However, say experts, some key markets like the Inland Empire are showing a propensity for absorbing any new supply additions.
While national industrial vacancies have remained stagnant at 7.7 percent for the past six months, the Inland Empire is experiencing vacancy rates of only 1.5 percent. Even more impressive is the vast amount of property that has hit the market in recent years.
'This supply would really be a problem in most markets,' developer Kipp Dubbs, president and chief executive officer of Laguna Hills-based Omni West Group told the NREI. 'But we’re seeing huge volumes of container traffic move into our ports, and the economic growth is expected to last.'
'I’ll reserve judgment on the extent of this new (industrial) supply,' Grubb & Ellis' Bach told the NREI. 'It still seems too early to call it chronic overbuilding.'
Inland Empire industrial property development buoyed by SoCal ports
