Located in Southern California, the Inland Empire, or “The IE” to locals, is comprised of Riverside and San Bernardino Counties, just east of Los Angeles County.  The Inland Empire is home to 4.5 million people, making it the 16^th most populous Metropolitan Statistical Area (MSA), ahead of regions such as Denver, Minneapolis, and San Diego.

In recent years, commercial real estate in the IE has grown steadily. Although the IE was hit in the Great Recession, the market has recovered strongly, and is near or has surpassed its pre-recession levels in many key commercial real estate measures, such as asking rents per square foot, vacancy rates, cap rates, and investment sales volume. But why invest in the Inland Empire instead of its more glamorous neighbors, Los Angeles (LA) and Orange County (OC)?  Here are several reasons why investors are looking to the IE to park their money:

1. 1. Higher investment returns (cap rates) than LA and OC:  A similar retail investment can be a half to a full percentage point higher cap rate in the Inland Empire versus LA or OC. For example, it is not unusual for an LA-area fast food restaurant building to sell for under a 4% cap rate, while a similar investment in the IE may sell for closer to a 4.5% cap. Bottom line, in most cases your investment dollar goes farther in the IE.
   2. Stable, fast-growing population:  As LA and OC get built out and the cost of housing continues to rise, many people are choosing to move to the Inland Empire to find more affordable housing, bigger yards, and a more relaxed lifestyle. The California Department of Finance projects that the area will see a population increase of 1.3 million people over the next 20 years.
   3. Huge growth in industrial construction: The IE currently has over 20 million square feet of industrial space under construction, the most of any region in the country. This construction will bring more people and jobs to the area.  The shopping network QVC recently opened a one million square foot facility in the city of Ontario that will bring 1,000 new jobs to the area.  Amazon recently announced construction of a distribution center in San Bernardino, which will be their fifth distribution center in the Inland Empire and their seventh in California.
   4. Strong job growth in multiple sectors:   Since 2011, the local workforce in the IE has been growing at the rate of 3% per year.  This is twice the national average and one of the fastest growth rates in California. Aside from the logistics and warehousing jobs mentioned above, the IE is seeing job growth in the healthcare, government, education, and construction industries.

The Inland Empire may not be as well-known as its Southern California neighbors, but it provides a great opportunity for real estate investors to receive strong returns in a dynamic, growing market.