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Feature Article, May 2005
Booming Market: Retail Development In The Inland Empire
California's Inland Empire sees growth beyond anticipation.
Randall Lewis
Even though my family has been developing in the Inland Empire for 50 years, we could not fully project the breathtaking growth of the last 5 years in Southern California's Inland Empire — the two-county area of Riverside and San Bernardino. Clearly, as longtime Inland Empire developers and land purchasers, we knew that as Southern California grew, this area would become a strong segment of the state.
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Summit Heights Gateway is a 260,000-square-foot community center developed by Lewis Retail Centers, which opened in 2003 in North Fontana, California.
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But the economic strength and rapid population growth of the Inland Empire has made this area jump to the sixth-strongest retail market in the entire United States, according to Marcus & Millichap's 2004 Annual Report. Based on its various indicators (forecasted employment, household growth, vacancy, construction, personal income and rent growth), Marcus & Millichap's ranking of the Inland Empire moved up from ninth to sixth in the single most recent year, surpassing both New York City and Los Angeles.
In fact, according to the Los Angeles Economic Development Corporation (LAEDC) 2005 Economic Forecast, 2004 was the year that the combined retail sales for the Inland Empire's two counties surpassed those of Orange County for the first time. This makes the Inland Empire second only to Los Angeles County in the Southern California region on a taxable sales volume basis.
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Phase I of Lewis Retail Centers' Eastvale Gateway, an 805,000-square-foot community center in Mira Loma, California. Phase II is now in development.
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Impressive by any standards, the fact that the population is expanding at a rate of more than 80,000 residents per year is truly astounding. The Inland Empire has emerged from its long agricultural period with record-breaking speed. Rather than the discussions of just 2 or 3 years ago on how to bring economic growth to the Inland Empire, city and county officials are now focused on meeting the needs of the new residents and the new businesses, including the new retailers that have, or are planning to, enter the market.
Some quick statistics include: •Median house prices have climbed above $400,000 in several Inland Empire cities.
•Many homes sell well over the $1 million mark.
•The Inland Empire led the state in new home building permits in 2004 with over 80 percent of the activity in single-family units.
•In recent years, over 1,000 industrial and office companies have located to the Inland Empire.
•More new jobs were created in the Inland Empire than anywhere else in the state of California in 2004.
•The opening of the 210 Freeway along the foothills has created a quick path for commuters traveling east and west, which has generated increased demand for housing, both directly below the freeway and into the foothills.
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Murrieta Triangle is a planned 570,000-square-foot. mixed-use lifestyle center being developed by Lewis Retail Centers and Domenigoni/Barton Properties in Murrieta, California.
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The population is not only growing by number count, but also in terms of affluence. Skilled professionals, including doctors, lawyers and other high-income earners are moving to the Inland Empire, where they can buy more home for their dollar, while continuing to work near their home. The rapidly rising population generates a growing need for all services, including accountants, dentists, bankers and mortgage brokers. Young professionals in particular have been all but priced out of Los Angeles, Orange and San Diego counties. In response, builders in the Inland Empire are creating executive housing for this new group of upscale residents.
Breadth and Depth of the Retail Scene
These professionals, both young and established, may be new to the area, but their taste and their income run to the higher-end shops, services and restaurants of their more settled metropolitan neighbors.
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Randall Lewis, principal and executive vice president of Lewis Retail Centers.
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One project of particular note is Victoria Gardens, the Inland Empire's new open-air lifestyle center, which we joint-ventured with Forest City West. The center features such high-end stores as Apple, Pottery Barn, Coach, J.Jill and Williams-Sonoma, to name a few. The early and overwhelming success of Victoria Gardens clearly demonstrates the pent-up demand for more upscale retail in the Inland Empire. The increase in the number of higher-end shoppers creates the opportunity for a greater mix of retail tenants in the Inland Empire. However, this is just part of the attraction for retailers. The larger story is the tremendous growth in the population of the market.
The demand is so great for all types of retail that Lewis Retail Centers has nine-plus shopping centers currently in development in the Inland Empire [see sidebar].
The Inland Empire Retail Scene Comes of Age
Shopping centers such as Victoria Gardens, as well as our Eastvale Gateway and Sierra Lakes projects are examples of centers aimed at the more sophisticated customer who now resides in the Inland Empire.
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Phase II at Eastvale Gateway will more than double the size of the successful center. When completed, the total center will be 805,000 square feet.
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Prior to these centers becoming options for the Inland Empire shopper, many residents were driving to Los Angeles and Orange County centers when they wanted to do “serious” shopping.
This was a loss not only of sales tax dollars which were being spent outside the market, but also of the sense of community which shopping centers clearly create.
Retailers have certainly taken notice of the Inland Empire and now recognize its strength. Word of their success has spread, and rather than having to explain the market to prospective retailers, we now have retailers coming to us with the Inland Empire on their expansion list for 2005 and beyond.
Randall Lewis is executive vice president of Upland, California-based Lewis Retail Centers.
LEWIS RETAIL CENTERS UNDER DEVELOPMENT
Lewis Retail Centers has nine retail centers under development in the Inland Empire:
1. Eastvale Gateway, Mira Loma, California (Riverside County): Phase II summer 2005; 801,000-square-foot community center.
2. The Marketplace at the Enclave, Mira Loma, California (Riverside County): 2006; 105,000-square-foot neighborhood center.
3. The Shops at the Resort, Mira Loma, California (Riverside County): 160,000-square-foot mixed-use center.
4.Murrieta Triangle, Murrieta, California: 2007; 570,000-square-feet of mixed uses; a joint venture.
5. The Venue at Perris, Perris, California: 700,000-square-foot community center.
6. Sierra Lakes Marketplace, North Fontana, California: Phase II, 2006; 338,000-square-foot community center.
7. Sierra Lakes Village, North Fontana, California: 2006; 112,000-square-foot neighborhood center.
8. Sierra Lakes West, North Fontana, California: 2006; 175,000-square-foot community center.
9. Parkside Plaza, Ontario, California: 2007; 116,000-square-foot neighborhood center. |
©2005 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.
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