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SCB Rediscovering the Inland Empire .pdf

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Rediscovering The Inland Empire
California’s 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.


n a recent trip to Southern California, Shopping Center Business noticed that the Inland Empire seemed like it had a lot of activity. The
area’s regional centers are active, and its
strip centers appeared healthy. The Inland
Empire grew with the burgeoning economy in Southern California in the late
1990s and early 2000s. The area was rife
with new homebuilding and many new retail 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

The market has made a quiet comeback. 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 interviewed Brad Umansky, president of
Rancho Cucamonga, California-based
Progressive Real Estate Partners, to get a
feel for the market’s status today.
SCB: What are some of the misconceptions that people may have of the Inland

UMANSKY: The biggest misconception
is that SoCal’s Inland Empire, which includes both San Bernardino and Riverside counties, is a stepchild to Orange
County, Los Angeles County and San Diego 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

home. Luckily, they don’t 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 currently only building about 20 percent of the
houses we built in the mid-2000s, residential development is ticking up. We should
see a direct correlation in the future between new retail development and new
residential building.
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 marketplace. A lot of people travel from long
distances to visit the center. It has a number 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. Downtown Riverside has also really become a
dynamic area and the Temecula/Murrieta markets are very vibrant as well. In the
High Desert, the Mall of Victor Valley
and surrounding retail is a favored shopping 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 represent retailers and landlords. 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-andbutter 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

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. We’ve confronted quite
a few challenges creating a dynamic center 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 investment sales and we currently have over
$100 million in ‘for sale’ retail properties
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 percent of the residents consider themselves
of Hispanic heritage. But, many are second 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 creating 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
a former JC Penney location. One of the

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 didn’t know what sushi was. Now, we have sushi, poke, Thai,
and every other ethnic food.
SCB: You do a lot of work in the High Desert. 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 comprises 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 economy a little more
than other trade
areas in Southern California.
That said, there
has not been a
lot of new construction there
of late. The
area has really
over the course
Brad Umansky
of the past few
years and it is
well positioned Progressive Real Estate
for future economic growth

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 relocating to the area.
SCB: What is lacking in the Inland Empire? What opportunities do you see for
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 Cardenas Markets, Vallarta Supermarkets and
Superior Grocers. Likely, they will have
to begin doing ground up development
if they want to expand. Another category 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 families and their jobs. Retail concepts that do
well here provide the conveniences those
families need, as well as provide entertainment. There is a great new entertainment retailer in the market called Big Al’s,
which recently opened in Ontario. It is a
cross between Dave & Buster’s 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 market that thrives on indoor and outdoor
entertainment options.
SCB: How healthy is the Inland Empire
market today?

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,
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 decrease 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-ofmarket lease rate in the last cycle.

markets. So much site selection is done by
parties who are not based in the market;
they may know the market, but they don’t
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.

SCB: What should retailers who are interested in the Inland Empire market be
aware of when entering?

UMANSKY: There has been tremendous
investment in the infrastructure over the
past five years. The Interstate 15/215 interchange that leads to the High Desert
has been completed which is a tremendous benefit to that market. The 91 Freeway 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 number 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, especially those traveling regularly to Orange
County or Los Angeles County. SCB

UMANSKY: As we work with certain retailers, they find it interesting how spread out
the market is geographically. It is challenging 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 believe many good locations are overlooked
because of a lack of retailer knowledge. It
is difficult to convince them to try unproven locations, even though we know from
living and working here these are great

SCB: How has the market physically
changed over the past 10 years?

This article originally appeared in Shopping Center Business, May 2017.
© 2017 France Media, Inc.

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