Office Trends Reort Fourth Quarter 2019Office Trends Report Fourth Quarter 2019 Southwest Riverside...

Office Trends Report - Fourth Quarter 2019Southwest Riverside County, CA

WestMar Commercial Real Estate 41623 Margarita Road, Suite 100, Temecula, CA 92591 | Ph: 951.491.6300 | Fax: 951.491.6330

Southwest Riverside County Office Market Trendsis a newsletter published quarterly byWestMar Commercial Real Estate. To obtain additional copies or other WestMar Commercial Real Estate publications contact:

Sandi BriggsMarketing [email protected] in 1988

The above information, while not guaranteed, has been secured from sources we believe to be reliable.

Contents

Southwest Riverside CountyOverview . . . . . . . . . . . . . . . . 1

Market Assessment . . . . . . . . . . 2

Projects of the Quarter . . . . . . . . 4

Market Snapshot . . . . . . . . . . . 5

SOUTHWEST RIVERSIDE COUNTY

VACANCY % NET ABSORPTIONUnder Const

SF

ASKING RENT

By Submarket Total SF Direct Sublease Total Current YTDTotal

Average

Hemet 1,397,150 3.8% 0.2% 4.0% (3,914) 12,195 0 $1.42

Lake Elsinore 419,155 8.3% 0.5% 8.8% (18,444) (21,109) 0 $1.93

Menifee 434,483 0.9% 0.0% 0.9% 4,000 25,119 0 $2.18

Murrieta 1,971,413 5.4% 0.0% 5.4% 38,928 29,424 0 $2.37

Perris 377,555 1.3% 0.0% 1.3% 0 (3,671) 0 $1.84

Romoland 4,489 0.0% 0.0% 0.0% 0 0 0 N/A

San Jacinto 193,351 5.2% 0.0% 5.2% (3,619) 38,655 0 $1.84

Temecula 3,420,005 5.8% 0.6% 6.4% 27,577 41,144 8,000 $2.02

Wildomar 290,660 0.7% 0.0% 0.7% 0 9,632 0 $2.69 Winchester 6,375 0.0% 0.0% 0.0% 0 0 0 N/ASouthwest Riverside County

8,518,336 4.9% 0.3% 5.2% 43,528 130,389 8,000 $2.05

Source: CoStar: Office | Existing, Under Construction, and Under Renovation




Change From

4Q 2019 Last Qtr.

Last Year

2Q 2009 (end of

recession)

Direct Vacancy Rate 4.9% Total Net Absorption 43,528

Office Gross Rent Overall $2.05

Under Construction 8,000

During the fourth quarter of 2019 the direct vacancy rate in Southwest Riverside County decreased to 4.9%. Net absorption was positive 43,528 square feet. Quoted rental rates decreased slightly from fourth quarter 2018 levels, ending at $2.05 per square foot per month.

Annual Direct Net Absorption (square feet in thousands) Southwest Riverside County. Source: CoStar

NET ABSORPTIONOffice net absorption decreased in Southwest Riverside County during the fourth quarter of 2019, with positive 43,528 square feet absorbed. In third quarter 2019 net absorption was positive 56,292 square feet; in second quarter 2019, net absorption was negative 18,077 square feet, and in first quarter 2019, absorption was positive 48,646 square feet.

Office Direct Vacancy Rate Southwest Riverside County. Source: CoStar

VACANCYSouthwest Riverside County’s office direct vacancy rate decreased in the fourth quarter 2019, ending the quarter at 4.9%. Over the past four quarters, the market has seen an decrease in the vacancy rate, with the rate going from 5.8% at the end of the first quarter 2019 to 6.2% at the end of the second quarter 2019, to 5.6% at the end of the third quarter 2019, to 4.9% at the end of the fourth quarter 2019.

Total Weighted Average Monthly Asking Rent (NNN) Southwest Riverside County. Source: CoStar

RENTAL RATESAverage quoted asking rental rates in the Southwest Riverside County office market have increased since the previous quarter level, and are up from their levels four quarters ago. Office gross rent overall ended the fourth quarter 2019 at $2.05 per square foot. That compares to $2.02 per square foot in the third quarter 2019, $1.99 per square foot in the second quarter 2019, and $2.01 per square foot in the first quarter 2019. This represents a 1.99% increase from four quarters ago.




Unemployment Rate in Comparison Source: U.S. Dept of Labor, Bureau of Labor Statistics

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Net Change in Jobs by Industry Sector Riverside/San Bernardino/Ontario

June 2009 (end of recession) - November 2019 (in thousands)Source: U.S. Dept. of Labor, Bureau of Labor Statistics Labor Dept.

EMPLOYMENT AND INDUSTRYWhile there was a slight decrease in the unemployment rate in the fourth quarter of 2019, Riverside County has experienced a steady decline in the unemployment rate over the past four years. In November 2019 the unemployment rate was 3.8%. That compares to 4.1% at the end of 2018; 5.3% at the end of 2017; 5.3% at the end of 2016; and 6.7% at the end of 2015.

Since June 2009 (the end of the recession) Riverside, San Bernardino, and Ontario have added 372,100 jobs. The industries with the largest increase in jobs during this time frame are Health Care and Social Assistance (+93,400 jobs); Transportation and Utilities (+80,000 jobs); and Leisure & Hospitality (+50,400 jobs). Conversely the Information sector lost 3,000 during the same period.

INVENTORY & CONSTRUCTIONSince the beginning of the fourth quarter 2019, no new office buildings have been delivered to the Southwest Riverside County market.

There is currently one office building totalling 8,000 square feet under construction in Southwest Riverside County including:

• 43970 Margarita Road, Temecula - An 8,000 square foot medical office building scheduled to be completed in February 2020. There are currently no spaces available for sale or lease within the building.

Total office inventory in the Southwest Riverside County market area amounted to 8,518,336 square feet in 719 buildings as of the end of the fourth quarter 2019.

Southwest Riverside County Office Properties Under Construction Source: CoStar




To view all available office properties or download brochures, click here

PROJECTS OF THE QUARTER

41529-41539 Kalmia Street, MurrietaFOR LEASE: Located directly across from the City of Murrieta Town Square Park. One block from I-15 and California Oaks Road/Kalmia Street freeway interchange. Within walking distance of Historic Murrieta District. On lockbox.

1,060± to 2,120± square foot office & retail suites available

Listed by: Scott Forest

KALMIA PLAZA

42210 Roick Drive, Suite 11, TemeculaFOR SALE: Unique, double entrance office condominium with amazing views of Temecula Valley down below. Pride of ownership build out with high ceilings, dual AC units and controls, built-in cabinetry, kitchenette, restroom, solid 8 foot doors and modern finishes. Suite also currently benefits from a washer/dryer hookup which can be removed as appropriate.

Built 100% for office use, suite is fully fire sprinklered and ADA compliant at time of construction. Buyer to verify current adherence to standards.

1,964± square foot suite available

Listed by: Luanne Palmer and Jerry Palmer

OFFICE CONDO AT ROICK BUSINESS PARK

AddressApproximately 24,873± SF shopping center. Tenants include: Weston’s Market, The Hair Garden Salon, and $2.99 Cleaners. Excellent access and visibility from Murrieta Hot Springs Road - a major retail corridor. Convenient freeway access. Newly constructed median. Ideally situated to serve the Murrieta neighborhoods of Alta Murrieta and The Villas.

839± to 4,873± contiguous square foot office & retail suites available

Listed by: Luanne Palmer

MURRIETA VILLAGE CENTER

41690 Enterprise Circle North, TemeculaGreat window lines and bright suites. Easy access to Interstate 15. Walking distance to banks and restaurants.

690± and 1,350± square foot suites available

Listed by: Luanne Palmer and Jerry Palmer

PACKARD PROFESSIONAL BUILDING

OFFICE MARKET TREND REPORT | FOURTH QUARTER 2019



MARK ESBENSEN President|CEO 951.491.6300

[email protected] CA Lic. 00713990

FRED GRIMES CFO|Managing Director

951.491.6300 [email protected]

CA Lic. 00466126

SCOTT FOREST

Senior Vice President

Retail Division 951.491.6300


LUANNE PALMER Vice President

Industrial/Office Division 951.491.6321


JERRY PALMER Senior Vice President

Investment Division 951.491.6322


ALLISON ESBENSEN Marketing Assistant

951.491.6300 [email protected]

Our Team

Office Trends Reort Fourth Quarter 2019Office Trends Report Fourth Quarter 2019 Southwest Riverside...

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