Yardi Matrix: The (Inland) Empire Strikes Back
Propped up by robust job growth and a weak development pipeline, the Inland Empire’s multifamily market is thriving.
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Propped up by robust job growth and a weak development pipeline, the Inland Empire’s multifamily market is thriving. The area relies heavily on its role as the industrial hub of California, which has driven most of the growth for the metro, although improvement is visible across the board. Multifamily property values have consistently gone up along with occupancy rates, leading the transaction total and price per unit to all-time highs.
The continued growth of e-commerce, combined with the Inland Empire’s proximity to the ports of Los Angeles and Long Beach, has driven the industrial sector into uncharted territory. However, demand has more than kept up with the pace of supply, pushing rents and occupancy rates higher. Expansions by Amazon, Walmart and other major retailers have turned post-downturn talk of overdevelopment into a distant memory, as industrial stock nears 500 million square feet.
And multifamily demand continues to rise, as the Inland Empire is still the less costly housing option in the area, attracting residents from Orange County and Los Angeles, where rents and home prices are significantly higher. Going forward, policy makers will have to take on the challenges caused by the area’s poor air quality and income inequality. Multifamily fundamentals will remain favorable, however. The combination of high occupancy (97.1 percent as of April) and weak supply growth will lead to rent appreciation of roughly 6.8 percent in 2016.
