The Inland Empire of Southern California
By Li Chen, Associate
December 2007
The "Inland Empire" is the unofficial name coined in the 1950s to demarcate the area adjacent to, and inland from, California’s coastal counties of Los Angeles and Orange. The largest region of Southern California, the Inland Empire comprises over 50 cities spread between Temecula's Wine Country to the south and the San Bernardino Mountains to the north. According to the California Welcome Center, the Inland Empire represents the 13th-largest metropolitan economy in the Unites States.
Inland Empire communities have grown rapidly over the past two decades because homes and land are comparatively less expensive in this area than in other parts of Southern California. This situation has translated into a growing workforce, with business growth and diversity representing notable benefits. In May of 2005, Inc. magazine ranked Riverside-San Bernardino first (in the category of large cities) among top U.S. cities in which to do business.
Its relatively economical tracts of vacant land (compared to the costly and densely developed Los Angeles and Orange Counties), along with a relatively efficient transportation network (versus, again, the overly congested thoroughfares elsewhere in Southern California) have helped make the Inland Empire a major industrial center. Interstates 15 and 10, which are principle trucking routes to Arizona and Nevada, pass directly through the area, and some of the nation's largest manufacturing and shipping companies have chosen the area for their distribution facilities; these include Toyota Motor Corporation's North American Parts and Logistics Distribution Center in Ontario and APL Logistics in Rancho Cucamonga. In addition, Whirlpool Corporation recently signed a ten-year lease to occupy a 1.7-million-square-foot warehouse/distribution facility in Perris.[1]
As the leader in population and job growth in California, the Inland Empire boasts an office and industrial market that has never been stronger, thanks in part to the area’s unique offering of brand-new, Class A office space. In the third quarter of 2007, approximately 2.8 million square feet of office space was under construction, including Silagi’s Regency Tower in Riverside (251,000 square feet), and the first phase of Lakeshore Plaza in Corona (160,000 square feet). The Ontario Airport Towers Project has also entered its first phase of construction and will ultimately feature 850,000 square feet of Class A office space, 10,000 square feet of retail space, and a 175-room hotel.[2] Such mixed-use office developments, which can incorporate retail, high-density residential communities, office space, and hotels, are experiencing some of the highest success rates. The Inland Empire’s industrial market is likewise charged with momentum. As of October of 2007, 16.4 million square feet has been absorbed, and an additional 23.1 million square feet of space was under construction in the third quarter of 2007.[3]
The most active growth paths in the Inland Empire can be found to the east along Interstate 10 in Redlands, and along the Interstate 215 Corridor, a 30-mile stretch between Riverside in the north and Temecula in the south. This is perhaps best evidenced by March Global Port, a 350-acre site located on the south end of the former March Air Reserve Base. One of the region’s most dynamic new industrial projects, March Global Port offers over 530,000 square feet of warehouse space for commercial air cargo and distribution.
Lodging Development Trends
Lodging development has been active throughout the Inland Empire, particularly within its western cities of Ontario and Rancho Cucamonga. From 2005 to 2006, demand in Ontario and Rancho Cucamonga increased 4.1% and supply increased 10.3%. The spike in new supply came primarily from the opening of three new hotels in 2006: the 117-room Courtyard by Marriott, the 122-room Hilton Garden Inn, and the 93-room Holiday Inn Express. Year-to-date figures through June show a near reversal of 2006’s trends, as demand increased 6.3% and supply increased 4.7%. Construction began on a 180-room Holiday Inn and a 100-unit Comfort Suites in 2007. The additional supply brought by these hotels is expected to be absorbed over the next two years if no further supply is introduced to the market, and should help the market maintain a stable occupancy trend in the near future.
With so many companies having staked their claim in the “hot zone” west of Interstate 15, communities in the East Inland Empire, including Moreno Valley, Temecula, Lake Elsinore, Murrieta, Beaumont, San Jacinto, and Perris, have seen an increase in the number of logistics and manufacturing firms moving into their neighborhoods. In order to accommodate increased levels of demand, five hotel properties (553 rooms) opened in the East Inland Empire in 2006, followed by another five properties (434 rooms) in 2007. Demand for affordable, higher-quality limited-service hotels is on the increase because of recent growth in the area’s manufacturing and distribution sectors, and limited-service hotel development in the East Inland Empire looks to reap the benefits of this boom.
Hotels Opened in 2007
| Property Name |
City |
Open Date |
Number of Rooms |
| Fairfield Inn & Suites |
Temecula |
March 2007 |
94 |
| Holiday Inn Express |
Corona |
April 2007 |
80 |
| Hotel Extended Studio |
Victorville |
June 2007 |
60 |
| Best Western Lakeview Inn & Suites |
Lake Elsinore |
July 2007 |
71 |
| Homewood Suites |
La Quinta |
August 2007 |
130 |
Hotels Under Construction
| Proposed Property |
City |
Number of Rooms |
| Hampton Inn & Suites |
Banning |
94 |
| Holiday Inn Express |
Beaumont |
100 |
| Holiday Inn Express |
Fontana |
80 |
| La Quinta Inns |
Norco |
67 |
| Towne Place Suites |
Redlands |
50 |
| La Quinta Inn |
Temecula |
60 |
In addition to the properties under construction, Value Place, an extended-stay hotel chain, is under contract to develop properties in Moreno Valley, Loma Linda, Victorville, Perris, and Wildomar. These projects, now in the early planning stages, are likewise expected to benefit from significant demand generated by the area’s developing logistics, manufacturing, and construction industries.
Conclusion
The Inland Empire’s commercial infrastructure market, especially in its migration east, is expected to remain strong in the near term. New distribution and manufacturing operations should positively impact future demand for area hotels, which will benefit as the density of the area’s population, industrial presence, and overall appeal continues to increase.
[1] The Business Press, November 19, 2007
[2] Grubb & Ellis Report, Third Quarter of 2007
[3] Ibid.