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Continued Employment Gains In Major CA Metros Defy Predictions Of Recession

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Retail’s Slide Continues; No Affordability Relief As Home Supply Remains Low

December 19, 2019—LOS ANGELES, CA—Despite increasingly tight labor markets and historically low levels of unemployment, all of California’s major metropolitan areas have continued to add new jobs, according to a regional outlook released today by Beacon Economics. Led by a handful of industries including Professional & Business Services and Education & Health Services, annual job growth as of October 2019 (the latest data available) ranges from 3.5% in the powerhouse economy of San Francisco to 1.3% in the massive Los Angeles market.

While some major metros, and other areas of the state, have seen job growth slow compared to past years, both San Diego and the East Bay posted annual growth that is slightly higher than their post-recession averages. “It’s important to note that this is all happening amidst tightening labor markets and little to no growth in the workforce,” said Adam Fowler, Director of Research at Beacon Economics. “Although prognostications that a recession is imminent seem to be all around us, the data we see coming out of California’s largest urban centers does not support that storyline – at least not in the foreseeable future.”

Across metros, perhaps the most battered industry is Retail Trade, which experienced declining annual employment everywhere except the South Bay and East Bay. In the East Bay, retail employment tracked into positive territory for the first time since September 2018. “Retail’s overall decline essentially follows a long-term trend that is the result of an industry disrupted by e-commerce and fundamental changes in the way consumers make purchases,” said Fowler.

While the picture is generally bright for job growth, the high-priced housing markets in the state’s major metros continue to challenge would be homebuyers and will likely constrain future workforce growth. Although the most recent numbers show home price appreciation has moderated or contracted across most metro areas (with the exception of Los Angeles in a unique trend reversal), the available supply of homes remains low, putting upward pressure on prices and keeping them in a range that is out of reach for the majority of California residents.

Moreover, single-family homebuilding activity has been lackluster across all of the state’s major metro areas. And although the issuance of multifamily building permits has been much more robust, rental costs in every major metro have risen considerably indicating that despite increased supply, new rental units are being quickly absorbed.

“These look and act like low-supply, high-demand markets,” said Fowler. “Unless we add to the housing stock at a meaningful level in these regions, as well as in other areas of the state, unaffordable prices will continue to be the norm and ultimately will constrain economic growth in California.”

For complete findings, please view the full reports for the East Bay, Los Angeles, San Diego, San Francisco, and the South Bay/Silicon Valley attached to this email.

Beacon Economics LLC is an independent economic research and consulting firm based in Los Angeles. Learn more at www.beaconecon.com.

The Inland Empire Business Journal (IEBJ) is the official business news publication of Southern California’s Inland Empire region - covering San Bernardino & Riverside Counties.

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Stockbridge Acquires 540,478 SF Inland Empire Industrial Portfolio for $142MM

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San Francisco based Stockbridge acquires 100% leased assets in premier IE West location

Cushman & Wakefield’s EDSF also sources acquisition financing for transaction

Cushman & Wakefield announced the firm has arranged the sale of a core industrial portfolio totaling 540,478 square feet in Southern California’s premier Inland Empire West (IEW) submarket. The portfolio consists of two freestanding Class A buildings located a few miles apart at 3351 E Philadelphia St and 4450 E Lowell St in the city of Ontario. The buildings are 100% leased to prominent tenants in the distribution and retail industries.

San Francisco based Stockbridge acquired the two-property portfolio from Principal Asset ManagementSM a global financial and investment management firm. The portfolio sold for $142.25 million.

Jeff Chiate, Jeffrey Cole, Rick Ellison, and Matt Leupold of Cushman & Wakefield’s National Industrial Advisory Group—West represented the seller in the transaction. The firm’s Phil Lombardo, Chuck Belden and Andrew Starnes also provided leasing advisory.

Additionally, a Cushman & Wakefield Equity, Debt & Structured Finance (EDSF) team of Rob Rubano, Brian Share, Joseph Lieske, Max Schafer, and Becca Tse collaborated in sourcing acquisition financing for the transaction.

“Stockbridge has acquired an institutional-quality industrial portfolio with a phenomenal infill location combined with strong tenancy and premium distribution features and functionality. Both properties have maintained a historical occupancy of 100% for nearly a decade speaking to the tenant demand for industrial buildings of this quality and location,” said Jeff Chiate, Executive Vice Chair. “Additionally, with current rents below market rate, the buyer has a compelling mark-to market opportunity along with existing durable cash flow, providing a variety of value-add strategies.”

The properties offer convenient access to Southern California’s robust freeway network and other vital nodes of transit such as Ontario International Airport, the Los Angeles & Long Beach Ports, and LAX International Airport (60 miles). Access to a deep labor pool and robust consumer population also makes the region a superior industrial location.

According to Cushman & Wakefield’s latest industrial market report, the Inland Empire West submarket had a vacancy rate of 5.4% in Q1 2024, representing the tightest submarket in the broader Inland Empire market. Additionally, IEW achieved nearly 1 million square feet of positive net absorption (occupancy growth) in the first quarter of 2024.

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Stater Bros. Charities and Reyes Coca-Cola Bottling Give Back to Military Families

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Stater Bros. Charities, the philanthropic arm of Stater Bros. Markets, partnered with Reyes Coca-Cola Bottling again this year for their Give Back program during National Military Appreciation Month. The program ran for the entire month of May, during which Reyes Coca-Cola Bottling committed to donating $0.25 per eligible product purchased to the Bob Hope USO. Reyes Coca-Cola Bottling donated $15,000, and Stater Bros. Charities matched their donation for a total contribution of $30,000.

A check presentation occurred during a K-EARTH 101 radiothon benefiting the Bob Hope USO. The radiothon took place at the Bob Hope USO at LAX (Los Angeles International Airport) on June 29, 2023, where Stater Bros. Charities and Reyes Coca-Cola Bottling presented Bob Hope USO with a $30,000 check.

Bob Hope USO’s mission is to strengthen America’s military service members by keeping them connected to family, home and country, throughout their service to the nation. The Give Back program is a unique opportunity to show gratitude and support to the brave men and women who risk their lives for our freedoms and to care for their families while they are away from home on deployment.

“Stater Bros. Markets has a long history of supporting veterans, service members, and their families,” said Danielle Oehlman, Director, Stater Bros. Charities. “We are so pleased to partner with our friends at Reyes Coca-Cola Bottling and the USO to give back to those who have given so much for us.”

Lorin Stewart, President, USO West Region, said, “We are deeply grateful to Stater Bros. Charities and Reyes Coca-Cola Bottling for being sustaining partners of the USO. The Give Back program embodies the essence of the USO mission by enabling the community at large to come together to support and give thanks to our armed forces and their brave military families in an impactful way.”

Funds will support the Bob Hope USO and USO San Diego Center operations, including programs and services that strengthen the social, mental, physical, and emotional well-being of local military service members, their families, and their communities.

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BDK Logistics Intelligence Fully Leases 114,190 SF Industrial Facility in Corona, CA

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Cushman & Wakefield represents landlord in lease in SoCal’s Inland Empire

Cushman & Wakefield announced that BDK Logistics Intelligence, Inc. has signed a lease for an entire 114,190-square-foot industrial facility at 1161 Olympic Drive in Corona, California. Situated in Southern California’s renowned Inland Empire, the building is owned by Monterey Rancho Mirage, LLC, which was represented by Brett Lockwood and Rick Ellison of Cushman & Wakefield in the transaction.

“We are pleased to welcome BDK to the property as a quality industrial tenant that is expanding its presence in the market, which it also currently occupies multiple warehouse facilities,” said Director Brett Lockwood. “Our client was instrumental in helping this deal transact as there were many variables that needed to be navigated which led to this lease coming together quickly and successfully.”

1161 Olympic Drive is a quality freestanding building situated on ±4.8 acres and features 20 dock high loading doors. The property is conveniently located off Interstate 15 near the confluence of SR 91 and is proximate to the extensive freeway network traversing the entire Greater Los Angeles region and into other major markets in and out of state.

According to Cushman & Wakefield’s latest Q2-2023 quarterly report, the Inland Empire industrial market posted an overall vacancy of 3.4% and has recorded more than 2.7 million square feet of positive net absorption through the first half of 2023.

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