As attendees of the Inland Empire Commercial Real Estate Conference on January 26th, 2023, we gained valuable insights into the Southern California commercial real estate market. Hosted by Western Real Estate Business, Shopping Center Business, California Centers, Western Multifamily & Affordable Housing Business and the InterFace Conference Group, the conference brought together industry professionals to discuss the current state of the retail, industrial, and multifamily sectors in the Inland Empire. As one of the most active markets in the nation, this conference provided a platform to connect those involved in buying, selling, developing, leasing, or financing properties in the area.
In this summary, we will share what we learned from the various panels and discussions at the conference.
Panel One: Lenders
The lenders’ panel discussed the impact of the Federal Reserve raising rates in February and the changing economy, with lenders requiring more down payments and seeking experienced developers. Non-bank lenders are also getting involved. The biggest issues raised in the panel were construction and interest rate costs.
Panel Two: Multi-Family Real Estate
The second panel, focusing on multi-family real estate, had a positive outlook on the Inland Empire (IE) market with strong job growth and build-to-rent trend. The panel discussed the good investment opportunities along the 10 & 210 corridors, with rent increases of 30-40% over the last few years and a high occupancy rate of 96-98%. However, they also noted supply chain issues and long lead times as persistent challenges. The panel emphasized the benefits of investing in the IE, such as a better quality of life and more affordable housing compared to LA & OC, and recommended examining maturing debt. Average 1-bedroom rents were noted to be in the range of $1,600-$1,800.
Panel Three: Retail Real Estate
The retail real estate panel discussed the trend of retail sales going down after two years of record investment sales. The panel noted that sub-$5M investments are all-cash with higher cap rates over $5M, and retailers are expanding, with B & C tenants being more conservative. The IE market was noted as still being an education for national retailers and having a retail vacancy of 5.9%, with concerns about inflation. South Riverside, Eastern Inland Empire, Ontario and Rancho Cucamonga were noted as hot areas for retail.
Panel Four: Industrial Real Estate
The industrial real estate panel discussed the great location of the IE near major markets and ports, and the benefits of the high desert land being cheap for overnight trucking. The panel noted the demand for larger box size with a 0% vacancy in the 500K+ sqft range and 37M sqft under construction. The panel also discussed the importance of future-proofing buildings for the electric future and the big opportunity of building a campaign for localities to understand the benefits of industrial real estate. Lead times were still noted as a concern.
These were the main takeaways from each panel at the Inland Empire Commercial Real Estate Conference, providing valuable insights and updates for those active in the retail, industrial, and multifamily sectors in Southern California.