Industrial Market Overview: East End

Transcription

1 Industrial Market Overview: East End

2 U.S. Industrial Market Under Construction (million square feet) Q/07

3 Inland Empire Industrial Market Under Construction 25,000,000 20,000,000 (square feet) 15,000,000 10,000,000 5,000, Q/07

4 Inland Empire, 1Q/2007 Construction Stats vs. The Nation vs. The Region 18% of the nation s industrial under construction activity was in the Inland Empire in Southern California, the Inland Empire accounted for 72% of total construction activity.

5 Industrial Construction Inventory, by Market Inland Empire, 71.5% Los Angeles, 16.2% San Diego, 8.1% Orange County, 4.2%

6 Industrial - Completed Inventory, by Market Los Angeles, 55.9% San Diego, 9.2% Orange County, 14.9% Inland Empire, 20.0%

7 Industrial Completions, by Year (in sq. ft.) Inland Empire 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000, YTD

8 Where is Development Occurring as cities west of I-15 become built-out?

9 Answer: I-215 South Corridor

10 Port Traffic A MAJOR FACTOR From 2000 to 2006, containerized volume through the ports has gone from 9.5 million TEUs to 15.8 million By 2010 this number will jump to 19.7 million By 2030 it will reach 42.5 million Source: Port Import Export Reporting Service; forecast: Moffatt & Nichol Engineers

11 East End Industrial Inventory vs. Vacancy Rate 120,000,000 A 71% jump in the base since % 8.00% 100,000, % (square feet) 80,000,000 60,000, % 5.00% 4.00% 3.00% 40,000, Q/7 2.00% Industrial Inventory Vacancy Rate

12 East End YTD Sale & Leasing Activity 16,000,000 14,000,000 12,000, will be another active year (square feet) 10,000,000 8,000,000 6,000,000 4,000,000 2,000, Q/07 Sale & Leasing Activity

13 East End Notable Transactions Big 5 Sporting Goods Riverside 915,200 sf Black & Decker Corp. Rialto 543,000 sf Big Lots Stores Inc. Redlands 468,139 sf

14 East End Notable Transactions 2004 (continued) Cott Corporation San Bernardino 278,460 sf Wild Oats Markets, Inc. Riverside 241,238 sf US Food Services Corona 210,139 sf

15 East End Notable Transactions Solo Cup Rialto 882,230 sf Ross Stores Inc. Moreno Valley 686,400 sf Ashley Furniture Redlands 683,269 sf

16 East End Notable Transactions 2005 (continued) Minka Lighting Moreno Valley 532,926 sf Burlington Coat Factory San Bernardino 439,570 sf MGA Toys Rialto 435,733 sf

17 East End Notable Transactions Tesco PLC March JPA 820,400 sf Lamps Plus Redlands 784,280 sf Broyhill Furniture Industries Rialto 703,176 sf

18 East End Notable Transactions, 2006 (continued) PACTIV Corp. San Bernardino 586,020 sf Lowes Moreno Valley 507,995 sf Kuehne & Nagel Logistics Rialto 493,900 sf

19 East End Notable Transactions, 2006 (continued) Exel Logistics Redlands 446,050 sf Payless Shoes Redlands 415,000 sf Commodity Logistics Rialto 371,335 sf

20 East End Notable Transactions, 2007 Kimberly Clark Redlands 699,350 sf Homedics San Bernardino 598,865 sf VSE Corporation Riverside 218,000 sf

21 East End Notable Transactions, 2007 (continued) EMG Inc. Rialto 210,924 sf Dayton Superior Corp. Rialto 192,000 sf

22 East End Under Construction 21,000,000 18,000,000 A 396% increase since ,000,000 (square feet) 12,000,000 9,000,000 6,000,000 3,000, Q/07 Under Construction

23 Now VS. Then How were 1Q/2007 s numbers compared to one year ago?

24 Inland Empire, 1Q/2007 Vacancy Rate Under Construction YTD Sale & Leasing Activity Asking Rental Rates (whse/dist space) 4.4% (up from 2.8%) 24.2 million sf (up from 22.8 million sf) 8 million sf (close, 9.1 million sf) $0.41 NNN/sf/month (up from $0.41 NNN)

25 East End, 1Q/2007 Vacancy Rate Under Construction YTD Sale & Leasing Activity Asking Rental Rates (whse/dist space) 7.7% (up from 4.1%) 20.2 million sf (up from 14.6 million sf) 1.6 million sf (down from 4.6 million sf) $0.41 NNN/sf/month (parallel, $0.42 NNN)

26 What Does the Future Hold for the East End?

27 Noteworthy Developments Crossroads Logistics Sector Developer: Catellus Commercial Group Beaumont Centerpointe Business Park Developer: Ridge Property Trust Moreno Valley Ramona Expressway Logistics Ctr. Developer: IDS Real Estate Group Perris Perris Ridge Commerce Center Developer: Ridge Property Trust Perris 2.9 million sf 2.3 million sf 3.2 million sf 4.1 million sf

28 Noteworthy Developments (continued) Perris Distribution Center Developer: Rados Properties Perris 1.7 million sf Concourse/Cactus Commerce Center Developer: Overton Moore Properties Moreno Valley 1.1 million sf AllianceCalifornia Gateway, Northgate, Southgate & West Gate Developer: Hillwood San Bernardino 5.2 million sf

29 Noteworthy Developments (continued) Majestic Business Center at Meridian Developer: Majestic Realty Riverside Between Heacock & Indian Developer: Komar Investments Moreno Valley Majestic Freeway Business Center Developer: Majestic Realty Perris IDI Developer: IDI Riverside 1,200 acres 1.8 million sf 6.2 million sf 1.7 million sf

30 Noteworthy Developments (continued) South Perris Distribution Center Developer: First Industrial Realty Trust Perris up to 3.3 million sf

31 How Many Spaces, 250,000+ Sq. Ft. are Planned/BTS (Currently Available)? West End East End Total 16 Total...36 Source: AIR

32 Land Values In the East End, where 10-acre parcels are available, prices average about $7.00.

33 Available Land Parcels How many 20+ Acres Land Parcels are Currently Being Marketed for Purchase? Ontario & Vicinity: 1 East End: 18 Source: ILS

34 The Market s Pulse Opportunities Challenges Available Land Owner-Built / BTS Flexibility Affordable Pricing vs. Surrounding Markets DHL March Global Port Proximity to the Ports Economic Incentives Rising Construction Costs Higher Building Sale Prices Rising Interest Rates Higher Cost of Business in CA Traffic Issues Backbone Infrastructure ($$$)

35 Conclusion Short-term Speculative buildings will encounter longer shelf lives than their counterparts in the market s western reach will be a promising year although slower than the pace in 2005 and 2006.

36 The High Desert: The Next Growth Market

37 Conclusion Long-term The Inland Empire is one of Southern California s last industrial growth markets, and with vacancy rates at record lows in neighboring markets where land is nonexistent mass development will continue along the I-215 Corridor, and commence in the High Desert.

38 Thank You Dain Fedora Research Manager Grubb & Ellis Company