Industrial Product Fails to Meet Demand
By: Lisa Brown
The Inland Empire industrial market continued its growth in the first quarter of 2021 due to the continued demand for warehouse and distribution space, according to Lee & Associates’ first quarter 2021 industrial market report. Specifically, the East Valley industrial sector continued to outpace the expectations for 2020.
Gross absorption for 2020 totaled 22.7 million square feet, continuing on the heels of the record-breaking absorption performances in 2019 of 21.2 million square feet, 2018 of 27.3 million square feet, 2017 of 16.9 million square feet and 2016 of 19.3 million square feet. Gross activity in first quarter 2021 was 9.8 million square feet, with investment purchases and lease renewals accounting for 48.7 percent of the total.
With total absorption for 2020 outpacing the previous year, the industrial market is expected to hold strong throughout 2021. First quarter 2021’s absorption figures were 5 million square feet, compared to 5.4 million square feet during the same period last year.
Along with the expansion of e-commerce, companies need more product in the form of large distribution facilities and smaller short-haul locations. Demand has been punctuated by Amazon and large 3PLs as well as smaller manufacturers and distributors.
This growth is expected to continue throughout the rest of the year but the challenge will be the lack of available industrial product. Despite numerous developments underway, it is unlikely these new buildings will meet the expanding demands of companies throughout the Inland Empire. Vacancy remains low, under 5 percent in all submarkets, despite strong development activity and new buildings being delivered to the market.