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Retail Trends Report - Fourth Quarter 2017Southwest Riverside County, CA

WestMar Commercial Real Estate 41623 Margarita Road, Suite 100, Temecula, CA 92591 | Ph: 951.491.6300 | Fax: 951.491.6330

Southwest Riverside County Retail Market Trendsis a newsletter published quarterly byWestMar Commercial Real Estate. To obtain additional copies or other WestMar Commercial Real Estate publications contact:

Tina GrahamMarketing [email protected]

www.WestMarCRE.comFounded in 1988

The above information, while not guaranteed, has been secured from sources we believe to be reliable.

Contents

Southwest Riverside CountyMarket Snapshot . . . . . . . . . . . . . . . . 1

Market Assessment . . . . . . . . . . 2

Inventory & Construction . . . . . . . 3

Projects of the Quarter . . . . . . . . 4

SOUTHWEST RIVERSIDE COUNTY

VACANCY % NET ABSORPTION

Under Const

SF

ASKING RENT

By Submarket

Total SF Direct Sublease Total Current YTD Total Average

Hemet 6,462,959 6.9% 0.0% 6.9% 11,216 (18,246) 13,120 $1.14

Lake Elsinore 3,337,717 7.7% 0.0% 7.7% (15,767) (6,616) 73,804 $1.46

Menifee 2,119,897 2.2% 0.0% 2.2% 41,716 89,663 0 $2.31

Murrieta 5,444,610 7.2% 0.7% 7.9% 16,144 164,963 0 $1.61

Perris 2,732,776 5.2% 0.0% 5.2% 18,122 39,421 0 $1.63

Romoland 19,110 0.0% 0.0% 0.0% 0 0 0 N/A

San Jacinto 1,454,794 7.3% 0.0% 7.3% 4,252 28,593 0 $1.22

Temecula 8,370,833 4.2% 0.0% 4.2% 124,872 222,066 10,250 $1.98

Wildomar 601,089 11.2% 0.0% 11.2% 2,246 28,507 0 $2.09

Winchester 23,538 9.3% 0.0% 9.3% (2,200) (2,200) 0 $1.72

GRAND TOTAL

30,783,437 5.9% 0.1% 6.0% 201,001 454,691 97,174 $1.54

Source: CoStar: Retail | Existing, Under Construction, and Under Renovation




Change From

4Q 2017 Last Qtr.

Last Year

2Q 2009 (end of

recession)

Vacant Percent Direct 5.9% Net Absorption SF Total 201,001

All Service Type Rent Overall $1.54

Under Construction SF 97,174

In the fourth quarter 2017 the vacancy rate decreased to 5.9% (from 6.2% at the end of the third quarter of 2017). Net absorption was positive 201,001 square feet. Quoted rental rates remained steady at $1.54 per square foot per month.

Annual Direct Net Absorption (in thousands) vs. Direct Vacancy Rate Southwest Riverside County. Source: CoStar

NET ABSORPTIONRetail net absorption increased in Southwest Riverside County during the fourth quarter of 2017, with positive 201,001 square feet absorbed in the quarter. In the third quarter 2017, net absorption was positive 135,470; in the second quarter 2017, net absorption was positive 24,520 square feet; and in the first quarter 2017, absorption came in at positive 184,700 square feet.

Retail Direct Vacancy Rate Southwest Riverside County. Source: CoStar

VACANCYSouthwest Riverside County’s retail vacancy rate decreased slightly in the fourth quarter 2017, ending the quarter at 5.9%. Over the past four quarters, the market has seen an overall decrease in the vacancy rate, with the rate going from 6.3% at the end of the fourth quarter 2016 to 6.2% at the end of the first and second quarters 2017, to 6.2% at the end of the third quarter 2017, to 5.9% at the end of the fourth quarter 2017.

Total Weighted Average Monthly Asking Rent (NNN) Southwest Riverside County. Source: CoStar

RENTAL RATESAverage quoted asking rental rates in the Southwest Riverside County retail market ended the fourth quarter 2017 at $1.54 per square foot. That remains consistent with $1.5 at the end of the third quarter 2017; and compares to $1.51 per square foot in the second quarter 2017; and $1.48 at the end of the first quarter 2017. This represents a 4.17% increase over the last four quarters.




INVENTORY & CONSTRUCTIONSince the end of the fourth quarter of 2016, a total of 410,085 square feet of retail space has been built in Southwest Riverside County. There were three buildings totalling 59,552 square feet delivered to the Southwest Riverside Retail Market in the fourth quarter of 2017:

• 29655 Rancho California Road, Temecula (ALDI) - A 18,552 square foot retail supermarket that delivered October 2017. The property is 100% occupied by ALDI.

• 29737 Antelope Road, Menifee (LA Fitness) - A 38,000 square foot health club that delivered November 2017. The property is 100% occupied by LA Fitness.

• 345 E 4th Street, Perris - A 3,000 square foot freestanding retail building that delivered December 2017. Space is available for lease starting at 1,500 square feet.

There were six buildings consisting of 97,174 square feet of retail space under construction at the end of the fourth quarter 2017:

• 33395 Old State Highway, Hemet - A 3,120 square foot retail building that delivers January 2018. The building is 100% occupied.

• Pechanga Parkway & Wolf Creek, Temecula (Great Oak Marketplace at Pechanga Resort) - A 10,250 square foot retail storefront that delivers February 2018. Space is available for lease starting at 1,485 square feet.

• 29235 Central Avenue, Lake Elsinore (Lake Elsinore Marketplace) - A 3,500 square foot freestanding retail building that delivers April 2018. The building is 100% occupied.

• 4602 W. Florida Avenue, Hemet (Florida Promenade - Major 2A) - A 10,000 square foot community center that delivers May 2018. Space is available for lease.

• 24674 Collier Avenue, Lake Elsinore (Elsinore Central Marketplace) - A 66,000 square foot neighborhood center that delivers June 2018. The building is 100% occupied. Tenants include Marshall’s and Ulta Beauty.

• 24674 Collier Avenue, Lake Elsinore (Elsinore Central Marketplace - Pad 1) - A 4,304 square foot retail fast food building within a neighborhood center that delivers June 2018. The building is 100% occupied by Panera.

Total retail inventory in the Southwest Riverside County market area amounted to 30,783,437 square feet in 2,378 buildings as of the end of the fourth quarter 2017.

Unemployment Rate in Comparison Source: U.S. Dept of Labor, Bureau of Labor Statistics

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Net Change in Jobs by Industry Sector Riverside/San Bernardino/Ontario

June 2009 (end of recession) - November 2017 (in thousands)Source: U.S. Dept. of Labor, Bureau of Labor Statistics Labor Dept.

EMPLOYMENT AND INDUSTRYRiverside County, has had a steady decline in the unemployment rate from 2011 through 2017. In November 2017 the unemployment rate in Riverside County was 4.3%. That compares to 5.3% at the end of 2016; 6.7% at the end of 2015; 8.2% at the end of 2014; and 9.9% at the end of 2013.

Since June 2009 (the end of the recession) Riverside, San Bernardino, and Ontario have added 297,200 jobs. The industries with the largest increase in jobs during this time frame are Health Care and Social Assistance (+60,600 jobs); Transportation and Utilities (+49,300 jobs); Leisure & Hospitality (+47,500 jobs); and Construction (+40,900). Conversely the Information and Mining & Logging sectors lost 3,000 and 300 jobs respectively during the same period.

RETAIL MARKET SNAPSHOT | SOUTHWEST RIVERSIDE COUNTY | FOURTH QUARTER 2017



MARK ESBENSEN President|CEO 951.491.6300

[email protected] CA Lic. 00713990

FRED GRIMES CFO|Managing Director

951.491.6300 [email protected]

CA Lic. 00466126

SCOTT FOREST

Senior Vice President

Retail Division 951.491.6300


LUANNE PALMER Vice President

Industrial/Office Division 951.491.6321


JERRY PALMER Senior Vice President

Investment Division 951.491.6322


ALLISON ESBENSEN Marketing Assistant

951.491.6300 [email protected]

Our Team

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