Inland Empire Q1 2021 CRE Market Outlook
Inland Empire Multifamily and Industrial Vacancy Declined Sharply, as the Economy Began to Reopen from The Covid-19 Shutdown in Q1 2021
The Inland Empire’s commercial real estate markets performed differently, a year into the pandemic. Vacancy declined sharply in multifamily and industrial properties, while retail and office had more vacant space sitting on the market as the economy began to reopen from the Covid-19 shutdown in Q1 2021.
Vacant multifamily units decreased 54% in Q1 2021, dropping to a new level not seen even before Covid-19 shut down everything. The affordability of multifamily housing in the Inland Empire, compared Los Angeles and Orange Counties, drove demand for rental units.
The acceleration of online shopping and ecommerce growth during the pandemic boosted demand for warehouse and distribution space in the region. Vacant industrial space decreased 20.4% in Q1 2021, dropping well below pre-pandemic levels.
All property sectors in the Inland Empire, except retail, saw an increase in rent Q1 2021.
Retail registered the worst annual rent trend of all property types, falling 4.9% from a year prior. Motivated landlords, as demand plummeted, decreased rents to attract tenants.
The office market’s 8.1% growth in asking rent came even as newly completed space piled up due to a year of shrinking demand in the region caused by the pandemic. Undiscouraged, landlords pushed rents to pre-Great Recession levels. The average asking rent in Q1 2021 for office space in the Inland Empire was one cent shy of its all-time high reached Q4 2007.
The tremendous 11% growth in asking rent for multifamily housing happened even as more than 1,600 units were added to the market during the pandemic, since Q1 2020. With higher demand for rental housing, landlord ability to command higher rents for new units wasn’t affected by the statewide eviction moratorium in place through June 30, 2021.
Asking rent for industrial space continued at a healthy rate into the new year, up 1.4% annually – sharing the top spot in demand with multifamily among all property types.