TEMECULA, CA
Strong Fundamentals, Lower Vacancy
T
h
e Temecula industrial sub market experienced positive absorption of 62,738 square feet during the 3rd Quarter of 2015. Net absorption YTD was positive at 160,183 square feet. The total market vacancy rate fell to 2.3% during the 3rd Quarter of 2015, and, was one of the lowest vacancy rates recorded since the 2nd Quarter of 2006.
Va
cancy rates in multi-tenant segments dropped significantly and the overall multi-tenant vacancy rate decreased to 5.6%. Rental rates on multi-tenant suites increased to an average of $0.75 per square foot, on a Modified Gross basis.
There were six (6) sales of industrial properties during the 3rd Quarter of 2015. As a result of strong market fundamentals, which included the sale of a single 262,435 square foot industrial building that was on the market for several years, average prices decreased to $80.00 per square foot for industrial facilities in Temecula. However, it must be noted that the stated average rate was lower as a result of several larger square footage building sales; average sale prices are likely to be closer to $120 per square foot in subsequent quarters. The city's unemployment rate increased from the prior quarter to +/- 5.0%.
|
MURRIETA, CA
Higher Occupancy, Lower Inventory
T
he
M
u
rri
eta
i
nd
ust
ri
al sub market
ex
pe
ri
en
c
ed
positive absorption of 18,300 square feet
d
u
r
ing the 3rd Quarter of 2015, an increase from t
he
p
r
evi
ous
qua
r
t
erly
ab
s
o
r
pti
on
r
eadi
n
g. T
he
m
a
rk
et ex
pe
ri
en
c
ed
YTD positive Net Absorption of 159,678 square feet
.
The total vacancy rate in the 3rd Quarter remained essentially unchanged at 2.0%.
Multi-tenant v
ac
ancy
r
at
es fell by 50 basis points from the prior quarter, w
ith a t
o
t
al v
ac
ancy
rate
of 2.7
%.
As a
r
e
s
ult,
average multi-tenant
r
e
nt
al
r
a
t
es were slightly higher at
$
0.71
p
er s
q
ua
re
f
oot, on a Modified Gross basis.
There were three (3) sales of industrial properties during the 3rd quarter of 2015. Prices for industrial real estate in Murrieta increased to an average of $122.00 per square foot. The city's unemployment rate increased slightly to +/- 5.5%.
|
LAKE ELSINORE, CA
Positive Absorption, Low Occupancy
T
he
L
ake
E
lsi
no
re i
ndust
ri
al s
u
b
m
a
rk
et
ex
pe
r
i
enc
ed
positive absorption of 3,144 square feet
du
r
ing the 2nd
Q
ua
rt
er
of
2
015, with
positive YTD Net Absorption of 69,074 square feet.
With increased absorption, the total vacancy rate was essentially unchanged at 1.1%, slightly increasing f
r
om t
he
p
ri
or
qua
r
t
e
r and representing one of the City's all time low vacancy rates.
Adding to positive local fundamentals, construction is underway on an 10-acre industrial project, the first such development within the City in nearly nine years.
Multi-tenant segments of the market increased slightly from the prior quarter, with a total multi-tenant vacancy rate of 2.7%. Average rental rates were unchanged at $0.65 per square foot, on a Modified Gross basis.
There were no sales of industrial properties completed during the 3rd Quarter of 2015. Average prices in the city are positioned to spike to approximately $100.00 per square foot based on minimal availability and forthcoming new development deliveries. The city's unemployment rate increased to +/- 7.3%.
|
2015 MARKET SUMMARY
Excellent Market Fundamentals, Primed for New Development
The local commercial industrial real estate market continues to perform extremely well in 2015. Industrial market fundamentals remain very strong, putting upward pressure on property values. During the 3rd quarter, the local market experienced a firming in both rental rates and an increase in property values. Historically low vacancy rates continue to lay the groundwork for sustainable increases in property values across the submarket. Average property values for industrial buildings located within both Temecula and Murrieta maintained prior year gains, with average values easily surpassing the 'psychological' barrier of $100.00 per square foot. Due to a limited supply of existing industrial space, several new development deliveries are in the pipeline, including the recent groundbreaking in Menifee, CA of the +/- 657,000 square foot Commerce Pointe industrial park. As such, land values will continue to rise as businesses and developers acquire land for future industrial development and business expansion.
It is our opinion that unemployment rates serve as a leading indicator of future property absorption. Regional unemployment was lower within the region as compared with 12 months ago, suggesting local labor markets will maintain prior year gains. As such, strong fundamentals coupled with a trend of increased transaction volume in the 3rd quarter of 2015 suggest that activity in the local commercial industrial real estate market will continue to accelerate. Expect property values and rental rates to continue to climb throughout 2015. By all measures, 2015 will be a year of continued growth in fundamentals and signals the beginning of a new development cycle for commercial industrial projects.
Sources: Masino Industrial Consulting, Inc., Costar, California EDD
|
|
|
|
|
