Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/390025
O N T H E G R O U N D : I N l a N D E m p I R E , c a l I f. Boomtowns that went bust are seeing resurgence The Inland Empire is "in" again. This region of 4.2 million people east of Los Angeles was heralded as a symbol of economic health back when 30,000 homes were built there annually at the peak of the last real estate cycle, then got bashed as a stark reminder of the ensuing bust. Now the In- land Empire, loosely defined as California's Riverside and San Bernardino counties, is attracting retail and housing investment as before. And its economy could grow by some 4.2 percent annually through 2020, which would be the fastest rate in Califor- nia, according to analytics firm IHS. Projec- tions are that the region could create about 3,500 retail jobs this year alone. Leasing has been steady there these past few years: 60 big-box spaces mea- suring 20,000 square feet or larger were absorbed from midyear 2012 to midyear 2014, according to CBRE Group. "There's still some caution in the wind from the recession, but a lot of locations are get- ting absorbed," said Scott Riddles, senior vice president of CBRE's Retail Services Group, in Newport Beach. With new shopping center construction being slow, however, many best-in-class retailers that want to expand there have nowhere to roost, he says. Among the most desirable Inland Empire retail markets, according to CBRE, are the high-income Chino Hills, home to the upscale Shoppes at Chino Hills, and Redlands, where Amazon.com is building its third Inland Empire distri- bution center. Corona, Murrieta-Temec- ula, Rancho Cucamonga and Riverside are also getting more than their share of deals, says Erik Westedt, vice president of national retail and development at the CBRE Los Angeles office. Most new shopping centers in the region have a grocery anchor and less in- line shop space than they would have had in the previous construction cycle, CBRE says. In June Walmart broke ground on a 184,000-square-foot Supercenter, in Per- ris, 17 miles south of Riverside. The store, pegged for a 2015 completion, will be part of Trachman Indevco's Perris Market- place, which will feature restaurants and small-shop retail. Also in the works are Ontario Town Square, a $200 million downtown project with 72,000 square feet of ground-floor re- tail, plus restaurants, offices and a park; and Adelanto Towne Center, Lewis Retail Cen- ters' planned 280,000-square-foot, Target- anchored retail center in San Bernardino County. Inland Empire absorbed some 257,500 square feet of net retail space dur- ing the second quarter, adding up to roughly 2 million square feet of net absorption over the past 24 months, according to a Voit Real Estate Services report. Though surrounding cities are faring well, San Bernardino remains stymied in the wake of the quiet period brought on by its 2012 bankruptcy, says Judi Penman, CEO of the San Bernardino Area Chamber of Commerce. The city's main mall, the Macerich-owned Inland Center Mall, has performed well despite that, but conflict- ing agendas have dogged other projects, she says. A newly created express-bus lane downtown, for example, has up- rooted dozens of downtown businesses and hundreds of curbside parking spaces at a time when they are most needed, Penman laments. Meanwhile, retail developers are tak- ing few chances. "New homes and eco- nomic growth help, but [retail] decisions here are made based on an established population and sales that can be counted on, even with swings in the economy," said Westedt. The only consistently rising above-market rents are at 'A' properties and newly built centers, he says. And the general-retail category had the lowest second-quarter vacancy rate last year, at 4.21 percent, while specialty centers were highest, at 10.87 percent. "With few new deliveries in the pipeline to apply upward pressure on vacancy," ob- served Voit in its report, "the market should continue to strengthen." — Steve McLinden 72 S c T / O C T O B E R 2 0 1 4 R M A P h o t o g R A P h y C h i n o h i l l s