ONTARIO, CA-If what’s past is prologue, then Ontario is poised to recover more and faster than many other parts of the country when the US economic comeback finally gains momentum. Panelists?including an economist, a top broker, a major investor and a representative from Home Depot?presented a decidedly optimistic outlook for Ontario to an audience of 900 at the annual State of the City event at the Ontario Convention Center this week.
Ontario has set the stage to be a leader in the recovery because of what the city and the companies that have invested in it have accomplished in the past, according to the State of the City panelists: When the economy was expanding, millions of square feet of warehouse and distribution space were developed in Ontario in what has become one of the world’s largest logistics hubs?the largest in the world, some speakers said. In addition, the city sat in the midst of an Inland Empire economic and housing expansion that was one of the most robust in the country. So it only stands to reason that, once the recovery builds up a head of steam, Ontario is one of the cities best positioned to benefit because of its logistics hub, its transportation network and the city’s commitment to fostering growth via long-range planning.
That recovery is in its early stages, according to panelist Ross DeVol, director of regional economics at the Milken Institute, who said that, in his view, the recession ended in August last year. Although the recession hasn’t officially been declared over, DeVol said that a host of signs point to improvement in economic indicators like trade, jobs and housing. He said that upcoming reports on job growth will be pleasantly surprising, “especially here in the Inland Empire.”
DeVol forecast that “We’re going to see new construction by the second half of the year” in the housing industry, and he cited a small uptick in Southern California port activity at the end of the year as a good sign for Ontario, where so much logistics activity is tied to the ports.
Industrial and office vacancy rates remain high in Ontario and the rest of the Inland Empire, but increased demand bodes well for the future, according to panelist Darla Longo, vice chairman at CB Richard Ellis. Longo cited 26 existing requirements for industrial space totaling 13 million square feet in the Inland Empire. In the office market, there are 26 requirements for 300,000 square feet today, versus none a year ago, she pointed out.
Although lease rates have yet to follow the increase in demand, cap rates already reflect stronger investor interest, having risen across the region from year-ago levels, Longo pointed out. There is plenty of investor interest, “What we need is more sellers,” she said.
One of the biggest investors in Ontario is Hillwood, and John Magness, locally based vice president for the Dallas-based company, pointed out that Hillwood considers this a great time to invest further in Ontario, having recently acquired more than one million square feet in two buildings adjacent to its AllianceCalifornia development in San Bernardino. Another company investing in the city is Home Depot, which is scheduled to open a new 667,000-square-foot warehouse in the city this year that is one of the chain’s new rapid deployment centers. The centers are part of a Home Depot plan to have approximately 20 rapid demand centers in place by the end of 2010, serving all of its US stores.
The Ontario State of the City event was titled Focus on the Fundamentals and was designed to highlight what Ontario is doing today to respond to this market and prepare for the next cycle. Mayor Paul S. Leon and city council members, who led the panel discussion with questions for the panelists, also appeared in a city promotional video that kicked off the State of the City presentation, which the city stages each year as an informational and business networking event.
In the video, speakers gave Ontario high marks for its long-range planning. Ontario has developed what its planning director, Jerry Blum, says is the first general plan in the state that is completely Internet-based. Switching to the Web allows the city to keep the document updated, he points out. The Ontario plan is different from other city general plans because it incorporates the general plan with city policies that will provide the framework for the next 20 years, the city says.