Annual Building Property Expenses - NNN (Tenant Invoiced)
Elevator $2,287.32/yr
Elevator Registration $225.00/yr
Office Cleaning $4,800.00/yr
Landscape Maintenance $2,400.00/yr
Pest Control $840.00 /yr
Property tax $27,891.00/yr
Trash $3,338.88/yr
Security Alarm $676.68/yr
Fire Alarm $2044.80/yr
Ring Alarm $1,200/yr
Hazard Back-flow test $110.00/yr
Property Insurance $1,816/yr
S Riverside Submarket
The South Riverside Submarket encompasses the cities
of Temecula, Lake Elsinore, Murrieta, and Menifee, with
most of the larger office buildings that exceed 50,000 SF
located along I-15. Demand is primarily composed of
local serving businesses and government agencies, as
opposed to tech firms that have helped to drive pre-
pandemic demand to coastal areas for more than 10
years.
The area's attractive housing options have lured
millennials to the area, and office property owners have
sought to entice tenants from San Diego in search of
talent to move north along the highway. The growing
demographics also support the expansion of the medical
office sector. Vacancies are low at 5.3% and, much like
other parts of the Inland Empire, there have not been
many supply additions over that period apart from
medical office buildings. Abbott Vascular remains one of
the largest tenants in the submarket.
Rents average $26.00/SF on an annual basis and have
grown by 4.7% year over year. The average asking rent
remains below its 07Q1 peak of $26.90/SF. In CoStar's
Base Case scenario, rents are projected to remain below
prior peaks until 2023.
Office deliveries have been rare in most Inland Empire
submarkets over the past two years, and deliveries in the
South Riverside Submarket total just -670 SF in the past
12 months. One of the lone projects underway is a
58,000-SF medical office building in Murrieta. The two-
story building is nearing completion and fully leased.
Construction activity was more prevalent in 2017 and
2018. One of the largest deliveries from those years is
Kaiser Permanente's 80,000-SF medical office in
Murrieta. The 4 Star building is the first phase of Kaiser's
plan to construct an 824,500-SF complex, which will
include a hospital, diagnostic and treatment building,
medical office building, and a central energy plant to
power it all over the next 25 years
Local private investors account for the bulk of trades in
the submarket, and activity by private buyers has
exceeded private sellers over the past five years.
Investor appetite has moderated. Trailing 12-month
sales volume totals $60.6 million, compared to $69.0
million in 2020 and $63.7 million in 2019. Most trades
involve 3 Star offices, as there is only a handful of 4 & 5
Star offices in the submarket.
The submarket's downtowns (Old Town Temecula and
Old Town Murrieta) lack the mix of housing and office
space that helped drive pre-pandemic demand to many
downtowns in coastal communities. Looking ahead, a
proposed housing development just west of Old Town
Temecula could add 1,750 housing units, potentially
making downtown offices much more attractive.*
* Costar Report
