Market Reports

— By Kyle Yocum, first vice president, and Phillip Woodford, senior vice president, CBRE — The Inland Empire office market is experiencing a rise in cost, much like all sectors and markets throughout the U.S. As tenant improvement costs continue to increase, it’s becoming more and more challenging to find win-win situations with landlords and tenants. Landlords are having to increase their TI allocations, while tenants are having to show more flexibility as it relates to working with existing space. That, or they must cover a portion of the TI costs themselves or commit to longer-term leases to help the deal pencil for the landlord.  Due to TI costs, both parties need to meet halfway and make concessions. I think one of the reasons our market has done well is that we are a smaller market. Most parties involved seem to understand the give and take needed to make deals pencil for both sides.  Concessions are entirely contingent on TI costs, with landlords offering significant amounts of free rent and slight discounts on the rental rate if the TI costs are low. If a tenant is seeking major changes to the space, landlords are staying close to or at their …

By Steve Roppel, Senior Vice President, Allied Commercial Real Estate Encompassing 62 square miles, San Bernardino is the governmental seat of San Bernardino County, the largest county in the world at more than 21,000 square miles. About 86,000 people alone work within the city, per the 2020 Census. The largest industries are retail (12,280 people), transportation and warehousing (11,164 people) and health (9,603 people).  Of the six largest office buildings, only one is occupied by traditional multiple commercial tenants. The others are occupied by the county, city, courts, non-profits and the University of Loma Linda. The only large office building presently proposed is a county office building of 307,000 square feet. San Bernardino was historically a vibrant metropolitan whose image has become tarnished over the years. It is famous for its affiliation with Route 66, which runs through the city and allowed many people to emigrate to the Golden State. The first original McDonald’s restaurant – now a museum – was opened in San Bernardino in 1940. To restore the former luster and recognize the potential for San Bernardino, local governments have pulled together on several fronts. Multiple recent infrastructure improvements and redevelopments were completed and planned for San Bernardino, …

By Mike Adams, Managing Director, Stream Realty Partners The state of office is transitioning to a desire for dynamic spaces. Tenants in the Orange County office market are gravitating toward assets that act and function like hotels. They are seeking out the newest buildings and the most unique office environments. This is evidenced through leasing activity being the strongest in the Irvine/Tustin Legacy and Irvine Spectrum submarkets.  Employers are looking for a reason to bring their workforce back to the office and are recruiting high-caliber employees. One way to do this is through office space. Creative office space is still in high demand — and won’t likely change soon. Companies focused on employee retention want to create an “Instagram-worthy” type office environment. They are looking for office space that will create a buzz and function as a recruiting tool.  Office buildings are unique assets that facilitate collaboration, culture and training. This interest in new development signifies a flight to quality of office assets — for landlords and tenants alike.  Several trends related to the desire for quality include: Hotelization — office spaces that act and function as hotels Biophilic design — the concept of connecting a building with nature Proptech — using innovative technology and …