The Temecula Valley sits about 18 miles from the Pacific Ocean, off Interstate 15 and bordering San Diego County. This region is within one hour of downtown San Diego and less than one hour from Rancho Bernardo, Escondido, Vista, Carlsbad and San Marcos. Though located in southwest Riverside County, the Temecula valley borders San Diego County and is considered an extension of the San Diego real estate market.
The population in the region is estimated at over 300,000 and comprised of Temecula, with approximately 90,000 residents, and Murrieta, with approximately 80,000. Other surrounding cities that make up Temecula Valley are Menifee, Wildomar, Sun City, Lake Elsinor and unincorporated areas.
With the majority of existing office buildings located in Temecula, there is a strong demand for office buildings in Murrieta. Companies either relocating or expanding to the Temecula Valley are taking advantage of the location, employee labor base, housing and eliminating the commute to the surrounding counties.
The current multi-tenant office building market is approximately 1.3 million square feet and overall 97.4 percent leased. The office square footage is comprised of multi-tenant office buildings and does not include business parks, light industrial, owner-occupied buildings and office/warehouse buildings with office space only for lease.
According to Kevin Nellis, of Colliers International, lease rates in the Temecula office market range between $2 and $2.10 per square foot per month. There has been strong absorption in 2004 - much better than 2003, Nellis added, with about 80,000 square feet of net positive absorption rate to date.
Future office buildings
As of second quarter end 2004, there is approximately 275,000 square feet under construction in the Temecula Valley, with completion of most between the fourth quarter of 2004 to the second quarter of 2005.
Of this amount, approximately 17 percent is pre-leased and another 22 percent is out for signature. In addition to office building under construction, there is another 276,000 square feet planned.
The buildings under construction and planned in Temecula are located near Promenade Mall, on the west side of Interstate 15 in the foothills and Redhawk at Highway 79 south. Murrieta's buildings under construction and planned are located at the Golden Triangle (at interstates 15 and 215) and near the French Valley airport at Highway 79 north.
There is a demand for true Class A office buildings in the Murrieta Temecula Valley. With the majority of the tenant base having relocated from Orange and San Diego counties, the area is lacking this type of building.
Crossroads Corporate Center, the first Class A office building being built in Murrieta, fills that void. The center, when completed, will be two four-story buildings totaling 273,121 square feet. Phase 1 of Crossroads, being developed by Whitaker Investment Corp., is currently pre-leasing and is expected to open spring of 2005. Total square footage of Phase 1 is 78,000 square feet and suites range from 1,500 to 19,500 square feet.
According to Nellis, industrial and retail markets in Temecula alone are just as strong as the office market in Temecula Valley. On the industrial end, Temecula is about 94 percent occupied with a year-to-date net absorption rate at about 300,000 square feet. Retail is about 93 percent occupied and about 300,000 square feet of net absorption year to date.
Housing options range from single-family residences with green belt areas to luxury homes on golf courses, as well as multi-million dollar estates and horse ranches, making it a diverse locale. According to Southwest California Economic Alliance's Web site, the median price home in Orange County for the first quarter of 2004 was $572,550, San Diego stood at $483,040, while the median in Riverside/San Bernardino was a relatively affordable $258,890. Homes within southwest Riverside County also created more wealth for residents last year, increasing in value by an average of 32.9 percent.
Source: Mary Piper, Lee & Associates