Phil Pitchford A growing international trade and relatively cheap and available land in the Inland area should continue to fuel a strong office and industrial real estate market well into next year and perhaps even further, according to a study by a regional forecasting center. Riverside and San Bernardino counties will remain the leader for industrial development with more construction expected in the two counties in the next two years than anywhere else in Southern California. Rents for office properties are also expected to rise for at least the next two years. The predictions are included in the Casden Real Estate Economics Forecast from the USC Lusk Center for Real Estate, released this week. The forecast analyzes and predicts real estate activity across Los Angeles, Orange, Riverside and San Bernardino counties. "The Inland Empire is definitely well-positioned economically," said Delores A. Conway, director of the Casden Forecast, which analyzes economic trends affecting real estate. An expansion in the number of professional, technical and executive jobs in the two-county area has created a demand for office space, according to the survey. That is especially true around Ontario International Airport, where office rents are boosting the county average and where supply is growing, but not enough to keep up with demand. Riverside has also enjoyed a recovery in the office market during the last two years and now enjoys the highest office rents anywhere in the Inland area except Temecula, according to the forecast. Across the region, there are more buildings occupied at higher rents, leaving office vacancy at a five-year low. "A lot of businesses are moving to the Inland Empire for office space because they are attracted to the cheap rents," Conway said. "And on the industrial side, there is plenty of land for warehousing, even light industrial." The Ontario International Airport area also led the region in the amount of industrial space that was absorbed by the marketplace, accounting for 5.7 million square feet in 2004, about a third of the total amount for the two counties. The airport area is especially attractive to companies fleeing more expensive buildings in the San Gabriel Valley. About 5 million square feet of speculative industrial space was completed in the Inland area in 2004, and about 70 percent of it has been leased or bought, the study found. More than 15 million square feet of such space is under construction. The area real estate market is not bulletproof, however. Because international trade is driving much of the Inland area's growth, that trend could be upset if trade tariffs, a weakness in the dollar or other negative influences emerge, Conway said. Much of the data for the study was supplied by real estate brokerage Grubb & Ellis, which co-sponsored the forecast with First American Title Company.
