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Murrieta and Office Real Estate
Murrieta
is part of an
Inland Empire
office real estate market that is finally showing significant vitality.
In the 1990’s and again in 2001, net space absorption fell
below zero, as more firms gave up space than leased it.
Since 2002, the market’s net absorption has been positive.
It reached an annualized rate of 1.2 million square feet in 2004,
slowed in 2005 due to lack of space, and accelerated to record levels
near 2.0 million square feet in 2005-2006.
This is occurring because the
Inland Empire
now has a population of 4.0 million and 1.2 million jobs.
It is thus difficult for office operations to compete for
business from their coastal locations.
The sudden surge in absorption has forced the area’s vacancy
rate down to 7.0%, second lowest in the
U.S.
behind
Washington
,
D.C.
. Firms wanting space are
thus having trouble finding it.
In
March 2006, Murrieta had 372,555 square feet of office space completed
or under construction. The
represented 1.7% of the
Inland Empire
’s total of 22.4 million square feet.
Again, firms can find space in Murrieta.
In March 2006, the city had 86,657 square feet of industrial
space either vacant (36,657 square feet) or under construction (50,000
square feet), 8th most
of the 14 inland sub-markets. The
space in these two categories represented 22.0% of the city’s total,
the 2nd highest
rate in the
Inland Empire
. This included 194,427
square feet of completed Class A office space with 20,853 available
yielding a vacancy rate of 10.7%. New
space under construction will add 50,000 square feet to this total.
It also included 141,471 square feet of completed Class B office
space with 15,804 square feet available and a vacancy rate of 11.2%.
In 2005, developers took out permits for $3.1 million of office
development representing 2.1% of
Riverside
County
’s office permit valuation.
Southwest
Riverside
County
’s office lease rates are relatively high.
According to CB Richard Ellis, the average asking lease rate was
$1.91 per square foot a month in March 2006.
This was less expensive than the
San Marcos
area of
San Diego
County
($2.05 sq. ft./mo.) and more expensive than Vista ($1.84 sq.
ft./mo.) and
Escondido
($1.63 sq. ft./mo.). This
a positive fact, since if the space can be leased, developers will be
encouraged to build more. In
the Inland Empire, the
Southwest
Riverside
County
office market’s average lease rate is less than downtown
Riverside
($2.16 sq. ft./mo.),
Corona
($2.08 sq. ft./mo.),
Ontario
($1.99 sq. ft./mo.) and
Riverside
’s Hunter Park ($1.97 sq. ft./mo.).
It is more than
Chino
($1.85 sq. ft./mo.) or the
Inland Empire
average ($1.80 sq. ft./mo.).
Murrieta’s
office space along the I-215 freeway will likely be successful as it
becomes part of the market being created by the Meridian Project near to
March ARB. This will occur
because the city of
Riverside
is running short of developable office property, a fact that will push
office firms wanting to be in the county into the I-215 south corridor.
This migration will be encouraged when the new Metrolink line to
Perris opens in 2007.
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