News

High-quality office space surge hits Ontario, Rancho

Inland Valley Daily Bulletin, August 20, 2007

Andrea Bennett, Staff Writer

The current office boom in Ontario and Rancho Cucamonga doesn't just mean we'll see a lot more suits in these cities in the near future.

The explosion of Class A office space in the past few years is bringing more professional companies and higher-paying jobs to the area, ultimately shifting the demographics in these cities and paving the way for a more diverse, urban landscape. Photo Gallery: High-End Office Spaces Built, RC

"Many national companies with offices in Orange and L.A. counties are recognizing that there are large, underserved populations in the Inland Empire," said Otto Kroutil, community development director for Ontario.

"For these companies, it's becoming simpler, more efficient and less expensive to serve local businesses and populations from locally based offices," he said.

In Ontario, 23 million square feet of new office space is expected to be built in the next 20 years, according to recent studies.

Presently, 3.9 million square feet of office space are available and another 2 million are under development in the city.

Included in that is Class A office space, which is distinguished by its location, height, steel-frame construction and professional management.

The 28-acre Ontario Airport Towers project broke ground last week with a total of 500,000 square feet of Class A office space expected at completion.

The Piemonte development has 400,000 square feet of Class A corporate office space in the works, and the Historic Guasti District has plans for 125,000 square feet of Class A office space.

In addition, a 10-story, 250,000-square-foot Class A office tower is coming to the Ontario Gateway project. In Rancho Cucamonga, the entire office portion of the Haven Park project was already leased out before construction was complete.

That development includes two 75,000-square-foot Class A office buildings, which will house future tenants Co-op Financial and a University of Redlands satellite campus, among others.

Just to the east is the Empire Corporate Plaza, with three 80,000-square-foot Class A office buildings under way.

Mike Nelson, economic development manager for Rancho Cucamonga, said the city - like many others in the area - formerly had been primarily a manufacturing and distribution community.

Over the past 10 to 15 years, though, more professional, technology-based businesses have moved into the area, he said.

And the recent rush for office development in the region has sped up the process even more, Nelson said.

"It gives us more diversity in terms of our business base," he said. "We have a lot of high-tech manufacturing companies in town, but there's still a need for other types of companies."

Specifically, Nelson said, his city was attracting companies related to the housing industry - such as insurance, mortgage or financial services.

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said Ontario and Rancho Cucamonga have the potential to be the next Orange County. "

The area is positioning itself," Kyser said. "You watch Southern California's diversified economy continue to grow and people are looking for opportunity."

As Class A office complexes continue to sprout up, professional firms priced out of coastal markets will scurry east to claim a space in the Inland Empire.

Corporations are also relocating their headquarters here to better reach the burgeoning market with a population that has been growing at seemingly lightning speed.

A built-in executive work force is a major draw for companies seeking a place to set up shop, and a huge selling point for the area is the LA/Ontario International Airport, Nelson said.

Other factors include access to amenities such as hotels and entertainment when corporate clients come to town and low rent for Class A space compared to Los Angeles and Orange counties.

But available land is becoming sparse in the area, said Dan Foye, vice president of Collins Commercial in Ontario.

This - plus increasing office-space demand in the region - is starting to drive up rents, Foye said.

For instance, Class A space in the incoming Ontario Airport Towers is currently renting for $2.65 a square foot, he said.

In June 2006, asking rate per month for Class A space in Ontario was $2.08 per square foot.

Still, this influx of professional corporations to Ontario and Rancho Cucamonga will reshape the local economy and shift the demographic toward higher-earning, more educated executives in and around these cities. Nelson said many of those professionals already call Rancho Cucamonga home.

"A lot of people in Rancho Cucamonga meet that demographic, but - up until now - had to commute to other areas," said Nelson, who noted that more than a quarter of city residents hold an advanced degree.

"It's going to provide more employment opportunities for those people," he said.

The majority of Ontario's labor pool, by contrast, works in areas other than the corporate world, said Mary Jane Olhasso, economic development director for Ontario. "What you see in Ontario is a good, solid, middle- and working-class demographic," Olhasso said. "We're adding another 20 million square feet of offices, so we need to have the work force to attract these companies. Our educational attainment with college degrees are less than we need."

According to a 2005 U.S. Census study, only 6.6 percent of Ontario residents had bachelor's degrees, and just 3 percent had graduate degrees.

Olhasso said city officials expect many future residents of the New Model Colony to fill the educated executive void, and occupants of the new high-end housing going up around the city will likely help as well.

"The demographics of the Inland Empire are changing, and people moving into the area in the last few years have higher income and education levels," said Greg Devereaux, city manager of Ontario.

And the current Class A office-space surge will only continue to reshape these cities, the local economy and the people who live here into the future.

"Class A office space means you're going to have more services available here and higher wage jobs," Devereaux said. "It's just part of the evolution and maturation of the market."

 


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