Rediscovering the Inland Empire

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INLAND EMPIRE
As seen in...
Rediscovering The Inland Empire Californias
Inland Empire has quietly had a renaissance over
the past few years. Interview by Randall Shearin
Metro Main in Corona, California, is one of the
first mixed-use projects planned for the Inland
Empire that will feature apartments over retail.
O
n a recent trip to Southern Cali-
Recession. The market has made a quiet come-
back. New transportation arteries have opened in
the area, and new restaurants and retail have
discovered the market to create more
destinations and amenities for residents as
well. SCB recently in- terviewed Brad Umansky,
president of Rancho Cucamonga, California-based
Progressive Real Estate Partners, to get a feel
for the markets status today.
UMANSKY The biggest misconception is that
SoCals Inland Empire, which in- cludes both San
Bernardino and River- side counties, is a
stepchild to Orange County, Los Angeles County
and San Di- ego County. While there are many who
live in the Inland Empire who commute to those
markets, there is an even larger number of
people who live, work and play in the Inland
Empire. A downside to the recent economic growth
that has taken place throughout Southern
California is increased traffic and congestion.
As a result, just driving out of the market on
the weekends has become challenging, so many
people choose to stay closer to
fornia, Shopping Center Busi-
ness noticed that the Inland Em-
pire seemed like it had a lot of activity. The
areas regional centers are active, and its
strip centers appeared healthy. The Inland
Empire grew with the burgeoning econ- omy in
Southern California in the late 1990s and early
2000s. The area was rife with new homebuilding
and many new re- tail projects in the mid-2000s.
Like many suburban markets with incredible growth
rates, the Inland Empire defined loosely as
Riverside and San Bernardino Counties and some
parts of Eastern Los Angeles County was hit
hard during the Great
SCB What are some of the misconcep- tions that
people may have of the Inland Empire?
May 2017 SHOPPING CENTER BUSINESS
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INLAND EMPIRE
home. Luckily, they dont have to drive far
because the Inland Empire has great retail
centers, plenty of entertainment options and
wonderful cultural opportunities. Another
misconception is that retail is overbuilt in the
market. We have really balanced out the excess
that we had after the Great Recession when
growth of retail space got ahead of residential.
As a result of the residential market stalling
there was virtually no retail development during
the past seven years. Although we are current-
ly only building about 20 percent of the houses
we built in the mid-2000s, residen- tial
development is ticking up. We should see a
direct correlation in the future be- tween new
retail development and new residential building.
Sprouts, one of the grocers actively expanding in
the Inland Empire, is opening at Alta Loma Plaza
in Rancho Cucamonga, California, this month.
of the first mixed-use projects in the trade
area that will have apartments over retail.
Being a part of that type of a project has been
interesting. Weve confronted quite a few
challenges creating a dynamic cen- ter that
plays off the apartments and the Metrolink train
station across the street. We have also seen a
substantial increase in the amount of ground up
development that we are representing. In
addition to leasing, the office is also very
active in in- vestment sales and we currently
have over 100 million in for sale retail
properties listed.
reasons that a Food Hall can work in a market
like this is that people who live here enjoy a
range of ethnic foods. The Inland Empire is a
giant melting pot. If you look back 15 or 20
years, most people in this area probably didnt
know what su- shi was. Now, we have sushi, poke,
Thai, and every other ethnic food.
SCB What are some of the hot spots for retail
in the Inland Empire?
UMANSKY There are several. Victoria Gardens in
Rancho Cucamonga has turned out to be a gem of
the market- place. A lot of people travel from
long distances to visit the center. It has a
num- ber of restaurants and retailers that have
created a great environment. The area around
Ontario Mills is another popular retail
destination. The Citrus Village and Mountain
Gate centers in Redlands have helped create a
hub there as well. Down- town Riverside has also
really become a dynamic area and the
Temecula/Murrie- ta markets are very vibrant as
well. In the High Desert, the Mall of Victor
Valley and surrounding retail is a favored shop-
ping area. Highway 111 that runs to Palm
Springs is going through a renaissance with a
lot of redevelopment taking place in the
Coachella Valley.
SCB You do a lot of work in the High Des- ert.
The area is an extension of the Inland Empire
that is a bit of a secret market. Tell us about
that market.
UMANSKY Yes, the High Desert is part of the
Inland Empire and primarily compris- es the
cities of Victorville, Apple Valley, Hesperia,
Adelanto and Barstow. The High Desert has a
significant amount of available land, and thus
it ebbs and flows with the econo-
SCB What are the demographics like, in general,
in the market?
UMANSKY The Inland Empire is home to over 4.5
million people. About 50 per- cent of the
residents consider themselves of Hispanic
heritage. But, many are sec- ond or third
generation. Some retailers equate a Hispanic
population with lower incomes but that is not
always the case. The highest income communities
like Rancho Cucamonga and Corona have a
very high percentage of people who trace their
roots to a Hispanic origin. We are also seeing
significant growth in the Asian population, who
have moved from the San Gabriel Valley further
east. That is cre- ating some interesting
opportunities. We have seen the Food Halls start
to develop. A prime example is Haven City Market
in Rancho Cucamonga where a Food Hall will
anchor a new indoor marketplace in
my a little more than other trade areas in
South- ern California. That said, there has
not been a lot of new con- struction there of
late. The area has really strengthened over
the course of the past few years and it is
well positioned for future eco-
SCB You represent retailers and land- lords.
What are you currently working on in the market?
UMANSKY Our firm specializes in the leasing and
sale of retail properties in the Inland Empire.
We currently handle the leasing for over 100
shopping centers in the region. In addition to
the bread-and- butter leasing activity, we are
involved in the re-tenanting of several big box
spaces. We are representing an exciting project
called Metro at Main in Corona. It is one
Brad Umansky President Progressive Real Estate
Partners
a former JC Penney location. One of the nomic
growth
SHOPPING CENTER BUSINESS May 2017
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INLAND EMPIRE
including new residential and industrial
development. It is a place where housing is
affordable, the air is fresh and there are a
number of manufacturing jobs. People seeking a
good quality of life are relocat- ing to the
area. SCB What is lacking in the Inland Em-
pire? What opportunities do you see for
retailers?
UMANSKY Our marketplace is similar to many
markets around the country. We are gravitating
toward more food uses and unique grocery
concepts. The first 365 by Whole Foods in the
market will soon open in Upland. Sprouts and
Smart Final have been very aggressive in
opening new stores. We are seeing a lot of
meals-to-go and in-store dining from grocery
retailers. The Hispanic grocers are also seeking
opportunities, although they are in a phase
where there are few locations available. These
include Carde- nas Markets, Vallarta
Supermarkets and Superior Grocers. Likely, they
will have to begin doing ground up development
if they want to expand. Another catego- ry that
is taking off is health related uses and
fitness. There is a growing demand by these
types of users for retail space. The Inland
Empire is a very family oriented region people
are busy with their fami- lies and their jobs.
Retail concepts that do well here provide the
conveniences those families need, as well as
provide enter- tainment. There is a great new
entertain- ment retailer in the market called
Big Als, which recently opened in Ontario. It
is a cross between Dave Busters and Lucky
Strike. They have done an amazing job at hitting
what this market loves. They chose Ontario as
their first market in California which shows
that they saw a demand for quality entertainment
here. This is a mar- ket that thrives on indoor
and outdoor entertainment options.
Haven City Market is a unique new indoor
marketplace anchored by a Food Hall and grocer
that is planned for a former 75,000-square-foot
JC Penney location in Rancho Cucamonga,
California.
markets. So much site selection is done by
parties who are not based in the market they
may know the market, but they dont know it as a
resident does. We have seen retailers who have
opened in this market who have exceeded their
expectations. They generally tend to be more
surprised at how well they do than the reverse.
UMANSKY The vacancy rate is at about 7.5 percent
which is the lowest it has been since 2007. The
rate peaked at 9.8 percent in 2011 and we have
seen the greatest de- crease since then over the
past 12 months. That correlates to space
absorption, of course. Our top-of-market lease
rates are about 4 per square foot per month
for high quality, new construction space. That
is about 30 percent above the top-of- market
lease rate in the last cycle.
SCB How has the market physically changed over
the past 10 years?
UMANSKY There has been tremendous investment in
the infrastructure over the past five years. The
Interstate 15/215 in- terchange that leads to
the High Desert has been completed which is a
tremen- dous benefit to that market. The 91
Free- way expansion in Corona has just been
completed as well as the Foothill Parkway in
Corona. The 91 freeway now has six lanes, plus
two carpool lanes, going in each direction. That
is 16 lanes going through Corona. There have
been a num- ber of new interchanges built
throughout the market. All of this investment
helps with the movement of people and goods. We
are also seeing the increased use of public
transportation with Metro Link. That is a huge
benefit to residents, espe- cially those
traveling regularly to Orange County or Los
Angeles County. SCB
SCB What should retailers who are in- terested
in the Inland Empire market be aware of when
entering?
UMANSKY As we work with certain retail- ers,
they find it interesting how spread out the
market is geographically. It is challeng- ing
for them to understand why one area is a strong,
high income area, and just a short distance away
you are in a lower income area. They also find
it difficult to figure out how far someone will
drive to visit a project. Unfortunately, that
means that too many retailers gravitate toward
common locations the herd effect. I be- lieve
many good locations are overlooked because of a
lack of retailer knowledge. It is difficult to
convince them to try unprov- en locations, even
though we know from living and working here
these are great
SCB How healthy is the Inland Empire market
today?
This article originally appeared in Shopping
Center Business, May 2017. 2017 France Media,
Inc. www.shoppingcenterbusiness.com May 2017
SHOPPING CENTER BUSINESS