Rediscovering the Inland Empire

1. INLAND EMPIRE As seen in... 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. UMANSKY: The biggest misconception n a recent trip to Southern Cali- fornia, Shopping Center Busi- ness noticed that the Inland Em- Recession. The market has made a quiet come- is that SoCal’s Inland Empire, which in- O back. New transportation arteries have cludes both San Bernardino and River- pire seemed like it had a lot of activity. The opened in the area, and new restaurants side counties, is a stepchild to Orange area’s regional centers are active, and its and retail have discovered the market to County, Los Angeles County and San Di- strip centers appeared healthy. The Inland create more destinations and amenities for residents as well. SCB recently in- ego County. While there are many who Empire grew with the burgeoning econ- live in the Inland Empire who commute omy in Southern California in the late terviewed Brad Umansky, president of to those markets, there is an even larger 1990s and early 2000s. The area was rife Rancho Cucamonga, California-based number of people who live, work and play with new homebuilding and many new re- Progressive Real Estate Partners, to get a in the Inland Empire. A downside to the tail projects in the mid-2000s. Like many feel for the market’s status today. recent economic growth that has taken suburban markets with incredible growth place throughout Southern California SCB: What are some of the misconcep- rates, the Inland Empire — defined loosely is increased traffic and congestion. As a as Riverside and San Bernardino Counties tions that people may have of the Inland result, just driving out of the market on and some parts of Eastern Los Angeles Empire? the weekends has become challenging, County — was hit hard during the Great so many people choose to stay closer to May 2017 • SHOPPING CENTER BUSINESS

2. INLAND EMPIRE 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 current- ly only building about 20 percent of the houses we built in the mid-2000s, residen- tial development is ticking up. We should Sprouts, one of the grocers actively expanding in the Inland Empire, is opening at Alta Loma Plaza in Rancho Cucamonga, California, this month. see a direct correlation in the future be- tween new retail development and new residential building. of the first mixed-use projects in the trade reasons that a Food Hall can work in a SCB: What are some of the hot spots for area that will have apartments over retail. market like this is that people who live retail in the Inland Empire? Being a part of that type of a project has here enjoy a range of ethnic foods. The been interesting. We’ve confronted quite Inland Empire is a giant melting pot. If UMANSKY: There are several. Victoria a few challenges creating a dynamic cen- you look back 15 or 20 years, most people Gardens in Rancho Cucamonga has ter that plays off the apartments and the in this area probably didn’t know what su- turned out to be a gem of the market- Metrolink train station across the street. shi was. Now, we have sushi, poke, Thai, place. A lot of people travel from long We have also seen a substantial increase and every other ethnic food. distances to visit the center. It has a num- in the amount of ground up development SCB: You do a lot of work in the High Des- ber of restaurants and retailers that have that we are representing. In addition to created a great environment. The area leasing, the office is also very active in in- ert. The area is an extension of the Inland around Ontario Mills is another popular vestment sales and we currently have over Empire that is a bit of a secret market. Tell retail destination. The Citrus Village and $100 million in ‘for sale’ retail properties us about that market. Mountain Gate centers in Redlands have listed. UMANSKY: Yes, the High Desert is part of helped create a hub there as well. Down- SCB: What are the demographics like, in town Riverside has also really become a the Inland Empire and primarily compris- dynamic area and the Temecula/Murrie- general, in the market? es the cities of Victorville, Apple Valley, ta markets are very vibrant as well. In the Hesperia, Adelanto and Barstow. The UMANSKY: The Inland Empire is home High Desert, the Mall of Victor Valley High Desert has a significant amount of and surrounding retail is a favored shop- to over 4.5 million people. About 50 per- available land, and thus it ebbs and flows ping area. Highway 111 that runs to Palm cent of the residents consider themselves with the econo- Springs is going through a renaissance of Hispanic heritage. But, many are sec- my a little more with a lot of redevelopment taking place ond or third generation. Some retailers than other trade in the Coachella Valley. equate a Hispanic population with lower areas in South- incomes but that is not always the case. ern California. SCB: You represent retailers and land- The highest income communities — like That said, there lords. What are you currently working on Rancho Cucamonga and Corona — have a has not been a in the market? very high percentage of people who trace lot of new con- their roots to a Hispanic origin. We are struction there UMANSKY: Our firm specializes in the also seeing significant growth in the Asian of late. The leasing and sale of retail properties in the population, who have moved from the area has really Inland Empire. We currently handle the San Gabriel Valley further east. That is cre- strengthened leasing for over 100 shopping centers in ating some interesting opportunities. We over the course Brad Umansky President Progressive Real Estate Partners the region. In addition to the bread-and- have seen the Food Halls start to develop. of the past few butter leasing activity, we are involved in A prime example is Haven City Market in years and it is the re-tenanting of several big box spaces. Rancho Cucamonga where a Food Hall well positioned We are representing an exciting project will anchor a new indoor marketplace in for future eco- called Metro at Main in Corona. It is one a former JC Penney location. One of the nomic growth SHOPPING CENTER BUSINESS • May 2017

3. 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 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. 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 UMANSKY: The vacancy rate is at about of meals-to-go and in-store dining from markets. So much site selection is done by grocery retailers. The Hispanic grocers parties who are not based in the market; 7.5 percent which is the lowest it has been are also seeking opportunities, although they may know the market, but they don’t since 2007. The rate peaked at 9.8 percent they are in a phase where there are few know it as a resident does. We have seen in 2011 and we have seen the greatest de- locations available. These include Carde- retailers who have opened in this market crease since then over the past 12 months. nas Markets, Vallarta Supermarkets and who have exceeded their expectations. That correlates to space absorption, of Superior Grocers. Likely, they will have They generally tend to be more surprised course. Our top-of-market lease rates to begin doing ground up development at how well they do than the reverse. are about $4 per square foot per month if they want to expand. Another catego- for high quality, new construction space. SCB: How has the market physically ry that is taking off is health related uses That is about 30 percent above the top-of- and fitness. There is a growing demand by changed over the past 10 years? market lease rate in the last cycle. these types of users for retail space. The UMANSKY: There has been tremendous SCB: What should retailers who are in- Inland Empire is a very family oriented region; people are busy with their fami- investment in the infrastructure over the terested in the Inland Empire market be lies and their jobs. Retail concepts that do past five years. The Interstate 15/215 in- aware of when entering? well here provide the conveniences those terchange that leads to the High Desert UMANSKY: As we work with certain retail- families need, as well as provide enter- has been completed which is a tremen- tainment. There is a great new entertain- dous benefit to that market. The 91 Free- ers, they find it interesting how spread out ment retailer in the market called Big Al’s, way expansion in Corona has just been the market is geographically. It is challeng- which recently opened in Ontario. It is a completed as well as the Foothill Parkway ing for them to understand why one area cross between Dave & Buster’s and Lucky in Corona. The 91 freeway now has six is a strong, high income area, and just a Strike. They have done an amazing job at lanes, plus two carpool lanes, going in short distance away you are in a lower hitting what this market loves. They chose each direction. That is 16 lanes going income area. They also find it difficult to Ontario as their first market in California through Corona. There have been a num- figure out how far someone will drive to which shows that they saw a demand for ber of new interchanges built throughout visit a project. Unfortunately, that means quality entertainment here. This is a mar- the market. All of this investment helps that too many retailers gravitate toward ket that thrives on indoor and outdoor with the movement of people and goods. common locations — the herd effect. I be- entertainment options. We are also seeing the increased use of lieve many good locations are overlooked public transportation with Metro Link. because of a lack of retailer knowledge. It SCB: How healthy is the Inland Empire That is a huge benefit to residents, espe- is difficult to convince them to try unprov- market today? cially those traveling regularly to Orange County or Los Angeles County. SCB en locations, even though we know from living and working here these are great This article originally appeared in Shopping Center Business, May 2017. © 2017 France Media, Inc. www.shoppingcenterbusiness.com May 2017 • SHOPPING CENTER BUSINESS