Shopping Center Business

MAY 2017

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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INLAND EMPIRE 200 • SHOPPING CENTER BUSINESS • May 2017 Ontario as their first market in California which shows that they saw a demand for quality entertainment here. This is a mar- ket that thrives on indoor and outdoor entertainment options. SCB : How healthy is the Inland Empire market today? UMANSKY : The vacancy rate is at about 7.5 percent which is the lowest it has been since 2007. The rate peaked at 9.8 percent in 2011 and we have seen the greatest de- crease since then over the past 12 months. That correlates to space absorption, of course. Our top-of-market lease rates are about $4 per square foot per month for high quality, new construction space. That is about 30 percent above the top-of- market lease rate in the last cycle. SCB : What should retailers who are in- terested in the Inland Empire market be aware of when entering? UMANSKY : As we work with certain retail- ers, they find it interesting how spread out the market is geographically. It is challeng- ing for them to understand why one area is a strong, high income area, and just a short distance away you are in a lower income area. They also find it difficult to figure out how far someone will drive to visit a project. Unfortunately, that means that too many retailers gravitate toward common locations — the herd effect. I be- lieve many good locations are overlooked because of a lack of retailer knowledge. It is difficult to convince them to try unprov- en locations, even though we know from living and working here these are great markets. So much site selection is done by parties who are not based in the market; they may know the market, but they don't know it as a resident does. We have seen retailers who have opened in this market who have exceeded their expectations. They generally tend to be more surprised at how well they do than the reverse. SCB : How has the market physically changed over the past 10 years? UMANSKY : There has been tremendous investment in the infrastructure over the past five years. The Interstate 15/215 in- terchange that leads to the High Desert has been completed which is a tremen- dous benefit to that market. The 91 Free- way expansion in Corona has just been completed as well as the Foothill Parkway in Corona. The 91 freeway now has six lanes, plus two carpool lanes, going in each direction. That is 16 lanes going through Corona. There have been a num- ber of new interchanges built throughout the market. All of this investment helps with the movement of people and goods. We are also seeing the increased use of public transportation with Metro Link. That is a huge benefit to residents, espe- cially those traveling regularly to Orange County or Los Angeles County. SCB

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