Demand, Deliveries Maintain Rent Growth in the Inland Empire
Bolstered by population gains, multifamily demand continues to be strong for both Lifestyle and Renter-by-Necessity assets across the metro, where rents are expected to rise by 4.4 percent in 2018.
Following an interval of steady rent appreciation, year-over-year growth in the Inland Empire dipped below 4.0 percent for the first time since 2014. However, with both Lifestyle and Renter-by-Necessity assets growing nearly in unison, the prospect of continued improvement lingers. Demand continues to rise, bolstered by population gains that are among the highest in the state. And although some yields are compressing, there are still plenty of value-add opportunities around Riverside and San Bernardino counties.
As the industrial sector continues to grow by leaps and bounds, the Inland Empire’s trade, transportation and utilities industry is reasserting itself as the local economy’s main driver. The ports of Los Angeles and Long Beach have been posting strong freighting numbers to start the year, solidifying demand for warehousing and logistics space in the Inland Empire. With Amazon as its largest private-sector employer, the region’s e-commerce sector continues to thrive. However, the absence of a discernible urban core to sustain economic development could begin to hinder the area’s growth.
Going forward, development will likely stay tepid, as only 1,600 multifamily units are expected to come online this year. With restricted deliveries and demand continuing to stay high, we expect rents to grow by 4.4 percent in 2018.