Industrial real estate surges in west, drops in east.Activity is concentrated around Ontario Intl. Airport Industrial landlords in the eastern Inland Empire In·land Empire A region of the northwest United States between the Cascade Range and the Rocky Mountains, comprising eastern Washington, eastern Oregon, northern Idaho, and western Montana. Farming, lumbering, and mining are important to the area. had little to cheer about in the first nine months of 1992, as industrial leasing activity slowed to about half its year-earlier rate and industrial construction activity came to a screeching halt, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. data compiled by Grubb & Ellis Co. At the same time, industrial building owners in the western Inland Empire, especially those around the Ontario International Airport, reported increased leasing activity in the third quarter, and construction activity up 65 percent. And that activity has accelerated since the November elections, sources reported. The key difference between the two Inland Empire submarkets is the expanding Ontario International Airport at the western end of the market. "The Ontario airport is a destination center for warehouse users. That's a lot different than Riverside and San Bernardino San Bernardino, city, United States San Bernardino (săn bûr'nədē`nō), city (1990 pop. 164,164), seat of San Bernardino co., S Calif., at the foot of the San Bernardino Mts.; inc. 1854. , where much of the industrial space is used by manufacturers," explained John Earnhart, executive vice president at the Ontario office of commercial brokerage firm Lee & Associates. Tim Hawke, vice president of the Riverside office of commercial brokerage Grubb & Ellis Co., said Riverside and San Bernardino industrial landlords traditionally attracted Orange County companies with cheaper rates. However, Orange County rates rates levied upon the county, and collected by the boards of guardians, for the purpose of defraying the expenses to which counties are liable, such as repairing bridges, jails, etc. See also: County have dropped to within 5 to 10 percent of the Inland Empire's. It now takes cheap lease rates and the good transportation infrastructure offered by Ontario International Airport and its surrounding freeway grid to lure lure the skin-covered object which runs on a monorail on a Greyhound racing track and which the dogs are schooled to chase. The lure must be kept 30 to 40 ft ahead of the leading dog so that the field is stretched out. Orange and Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. county tenants, said Earnhart and Hawke. Somewhat tempering tempering, process involving slow and moderate heating to increase the hardness and toughness of metals that have undergone previous heat treatment. Metals are usually hardened (see hardening) by being heated to high temperatures and quenched rapidly. brokers' opinions and Grubb & Ellis data, Dr. Michael Carney Michael Carney (May 11, 1839 – February 2, 1919) was a Canadian politician. Born in Waterford, Ireland, Carney was educated at the Common School of Halifax, Nova Scotia. , a professor of finance and real estate at California State University Enrollment  , Pomona, warned against placing too much importance on
the drop in leasing activity in the eastern Inland Empire in the past
year.
"The fact is, they are still leasing space. People are still doing business in San Bernardino," he said. According to Grubb & Ellis, tenants leased 3.2 million square feet of industrial space in the western Inland Empire during the third quarter. That represents an increase of 32 percent from the 2.44 million square feet leased there during the year-ago period. Most of the third quarter 1992 property was leased in the area surrounding the Ontario International Airport. The entire Inland Empire industrial market now contains about 24.2 million square feet of empty space, which is slightly more than 20 percent of the market's 119.07 million square feet of industrial buildings, according to Grubb & Ellis data. Some brokers expressed fear that even tougher times lie ahead. They said today's discounted lease rates and resulting lower cash flow for landlords could cause more owners to default on mortgages in the months ahead. For instance, buildings surrounding the Ontario International Airport, despite the increase in leasing activity, are generating 15 to 25 percent less in rents than they did three years ago, brokers reported. That allows landlords to keep the airport-adjacent buildings priced competitively with buildings in Los Angeles County that have slashed slash v. slashed, slash·ing, slash·es v.tr. 1. To cut or form by cutting with forceful sweeping strokes: slash a path through the underbrush. 2. lease rates to keep tenants. If lease rates don't level off soon, many more industrial landlords in the Inland Empire could face foreclosure foreclosure Legal proceeding by which a borrower's rights to a mortgaged property may be extinguished if the borrower fails to live up to the obligations agreed to in the loan contract. in the months ahead, said Jeff Spindler, senior vice president and industrial broker at the Ontario office of Grubb & Ellis. While the slight uptick Uptick A transaction occurring at price above its previous transaction. In order for an uptick to occur, a transaction price must be followed by an increased transaction price. in third-quarter leasing activity might offer a glimmer of hope to some landlords, it did not offset the disappointing first half of 1992, when as many big users left the Inland Empire as came in, Spindler said. For instance, in the past year, L.A. Gear moved out of 400,000 square feet of industrial/warehouse space in Ontario. Furnishings furnishings the extra type or quantity of hair on the head, tail, ears or legs, specified for a particular breed. For example, the feathers in setters, the beard in Bearded collies, the eyebrows in Schnauzers. 2000 left 300,000 square feet when it shut down at the end of 1991. And Square D, a company that makes electronic components, left 130,000 square feet of industrial space, brokers said.
Industrial leasing activity
Western Inland Empire
Third qtr. Percent 1st 9 mos. Percent
(million change (million change
sq. ft) sq. ft.)
1992 3.22 +32% 6.68 +3%
1991 2.45 NA 6.47 NA
Eastern Inland Empire
1992 0.55 -57% 1.1 -46%
1991 1.29 NA 2.07 NA
Total Inland Empire
1992 3.77 +1% 7.79 -9%
1991 3.73 NA 8.55 NA
If the economy doesn't turn around, other tenants could join that exit list in the months ahead, Spindler warned. As an example, Spindler cited a deal in which he sold a 109,000-square-foot structure at 10523 Jasmine jasmine (jăs`mĭn, jăz–) or jessamine (jĕs`əmĭn), any plant of the genus Jasminum of the family Oleaceae (olive family). St. in Fontana that GlenFed Development Inc. had taken back. That building was bought from GlenFed for an undisclosed price by Lynns & Alliance, a company that imports and distributes china. Lynns & Alliance will occupy half the structure and is looking to lease the remainder, Spindler said. Other Inland Empire industrial brokers offered market summaries that paint somewhat brighter pictures for industrial building owners than Grubb & Ellis' assessment. The region could get a big boost by the end of this year if General Electric Co.'s Lamp Division carries through on its plan to leave its 1 million-square-foot facility in Walnut walnut, common name for some members of the Juglandaceae, a family of chiefly deciduous, resinous trees characterized by large and aromatic compound leaves. Species of the walnut family are indigenous mostly to the north temperate zone, but also range from Central , a community in eastern Los Angeles County, for a 400,000-square-foot facility somewhere near the Ontario International Airport, revealed sources close to the negotiations who asked not to be named. GE earlier this year leased 136,000 square feet of warehouses in Fontana, said Rick John, vice president of the Ontario office of Collins Fuller Corp., a Newport Beach-based brokerage. Despite the sluggish first half of 1992, John predicted the Inland Empire inventory of large warehouse spaces could quickly diminish. "Users see that, while there are still quite a few spots that offer 100,000 to 200,000 square feet, there are few landlords that can deliver 300,000 to 400,000 square feet," he pointed out. At the same time, John admitted the Inland Empire has lost some major leasing deals in the last year. For example, Lechters, Inc., a Harrison, N.J.-based housewares house·wares pl.n. Cooking utensils, dishes, and other small articles used in a household, especially in the kitchen. company, skipped over the Inland Empire recently, opting instead to house its 220,000-square-foot warehousing operation in Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. . Clothing discount retailer TJ Maxx similarly bet on Las Vegas by establishing a regional distribution center there last year, John said. Mike Chavez, an industrial broker at the Ontario office of Cushman & Wakefield of California Inc., expressed more optimism than Spindler. He predicted the Inland Empire's cheap lease rates and expanding transportation infrastructure should give the Ontario airport region a competitive edge over Los Angeles County submarkets. "Industrial users can trim overhead (costs) by moving to the Inland Empire," Chavez said. "Lease rates here have dropped 18 to 20 percent from the same time last year." Three years ago, tenants were paying 28 to 32 cents a square foot per month for industrial and warehouse space, not including utilities, taxes and maintenance. Today, landlords are lucky to get 22 to 26 cents a foot per month and, in many cases, also pick up the tab for utilities, taxes and maintenance. "That adds up to an overall savings of 25 to 30 percent in leasing expense when tenants renegotiate re·ne·go·ti·ate tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. their leases," Chavez said. Apparently, some of that optimism is rubbing rubbing, v creating friction and heat by drawing the hands across the body at varying speeds, rhythms, and depths. Benefits include muscle elongation, tension release, and increased flexibility. off on developers because the volume of industrial space under construction in the Inland Empire rose from 863,958 square feet in the second quarter to 1.14 million square feet in the third quarter. Most of that new construction is taking place around Ontario International Airport, according to data compiled by the Burbank-based Construction Industry Research Board. Some of the largest Inland Empire lease transactions of the past 12 months include: Baxter Healthcare Corp. leased 153,000 square feet of warehouse space on Rockefeller Avenue in Ontario. Berkline, a Mira Loma furniture maker, is slated to relocate re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. into 40,000 square feet of space on Rochester Street in Rancho Cucamonga Rancho Cucamonga (răn`chō k  'kəmäng`gə), city (1990 pop. 101,409), San Bernardino co., S Calif. later this year or early next year.
In October, W.W. Granger Inc., a company that warehouses and sells industrial tools and supplies, leased 144,000 square feet of warehouse space at 1990 Vintage Ave. in Ontario. National Distribution, a public warehousing and freight forwarding company, leased 70,000 square feet of warehousing on Newport Drive in Rancho Cucamonga. Firestone fire·stone n. 1. A flint or pyrite used to strike a fire. 2. A fire-resistant stone, such as certain sandstones. Noun 1. signed a lease for 410,000 square feet of warehouse space on Jurupa Street in Ontario.
Industrial construction activity
Western Inland Empire
Third qtr. Percent change
(million sq. ft.)
1992 1.14 +65%
1991 0.69 NA
Eastern Inland Empire
1992 0 -100%
1991 0.17 NA
Total Inland Empire
1992 1.14 +32%
1991 0.69 NA
Owens Corning Owens Corning Corporation is the world's largest manufacturer of fiberglass and related products. It was formed in 1935 as a partnership between two major American glassworks, Corning Glass Works and Owens-Illinois. The company was spun off as a separate entity November 1, 1938. moved its Carson operations into 112,665 square feet of industrial space in Fontana. Sport Chalet Sport Chalet is a retailer of sporting equipment, apparel, shoes, and accessories in the United States. It operates approximately 40 company owned stores in Southern California, Arizona, Nevada, with new stores opening soon in Utah, with the first at Jordan Landing. abandoned its Pomona location for 156,240 square feet of space in Montclair, so it could be closer to the Ontario International Airport. Superior Transportation Systems boosted its Rancho Cucamonga operations by leasing an additional 264,960 square feet of industrial space. Also, Nestle consolidated its Orange County and Ontario facilities into 327,928 square feet of industrial buildings in Mira Loma, just east of the Ontario International Airport. |
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