Recent macroeconomic conditions have prompted many negative predictions for near-future prospects in many industries and regions. However, according to the Inland Empire Business Activity Index released in December by the UC Riverside School of Business Center for Economic Forecasting and Development, recent growth in the area can be expected to continue in the coming year.
Business activity in the Inland Empire increased at a 2.8% annualized rate in the third quarter of 2022, the latest data available when the analysis was released, and is forecast to grow between 2% and 3% over the next year. Growth in the third quarter was solidly higher than in the second quarter growth of 1.6%, although there was a notable decline from the first quarter of 2022 (4.7%) and the last quarter of 2021 (6.4%). The authors noted that this longer-term decline was to be expected as the region transitioned back to pre-pandemic conditions.
Taner Osman, research manager at the Center for Economic Forecasting and one of the Index authors, stated, “Since the pandemic’s lows, the Inland Empire has experienced a very steady economic recovery, outpacing coastal California along many key measures…. While we are now seeing some weakness in the residential real estate market, that has been largely offset by impressive growth in employment, the labor force, consumer spending, building permits, and commercial real estate.”
Nearly every category of nonresidential building permit grew in value in the Inland Empire in 2022, demonstrating that local commercial real estate construction is enjoying a surge. Office property was the category showing the largest growth, with building permits for new office space rising 380%. That pushed the year-to-date value for new commercial real estate 205.7% above 2021 levels. Additionally, nonresidential alterations and additions rose 46% from the previous year, demonstrating that many companies were choosing to improve or expand their space.
These figures are somewhat surprising, given the shift to remote work caused by the pandemic. Vacancy rates in the Inland Empire also speak to the strength of office properties in the region, though. Vacancies in office properties increased only 0.2% since the first quarter of 2020. The largest jump in vacancies was in retail properties, 0.6%, highlighting the effect of e-commerce spending on the retail sector.
While retail experienced a decline, warehousing and distribution properties reaped the benefit of the massive shift to e-commerce. The vacancy rate for these properties declined 9.1% from the first quarter of 2020, despite the fact that nearly 35 million square feet of new warehouse space also came online over that period.
Builders looking for projects in areas experiencing ongoing growth have many opportunities in the Inland Empire, where it is clear that the region has largely rebounded from the disruptions caused by the COVID-19 pandemic. Undertaking potentially lucrative contracts for large projects also comes with the risk of costly disputes that can embroil your company in protracted, expensive legal battles. Many of those risks can be effectively mitigated with a well-written contract and with an experienced legal team behind you—unfortunately, it is not unusual for builders to start looking into their legal options only after something has gone wrong, when many of the best opportunities to protect themselves and their business have already passed.
At Ghassemian Law Group, our attorneys have decades of experience in construction law. We can create personalized contracts that help reduce your exposure to risk. We also defend your rights should a legal dispute arise. If you are faced with a lawsuit, our commercial and construction attorneys can review your case from a holistic standpoint, helping you find the most cost-effective path to resolution.
With the expertise of Ghassemian Law Group on your side, your construction firm can confidently take on new projects without the fear that today’s opportunity will turn into tomorrow’s endless litigation nightmare. To learn more about how we can help protect your company and your legal rights, contact us here.
This article is informational only and meant to provide guidance. It is not meant to be legal advice and it does not create an attorney-client relationship. For what to do in your specific situation, please consult with a qualified Construction Law attorney.
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