The Inland Empire
Statistics by John Husing Ph.D
Murrieta and the Inland Empire
Inland Empire. To understand the forces affecting Murrieta, it is necessary to review the conditions that are causing the Inland Empire to be one of America’s fastest growing places. From 2000-2020, the area’s population is expected to go from 3.26 million to 5.28 million, up 2.02 million. That is more people than will be added by 44 of the 50 states. Interestingly, the region will add more people than Los Angeles County (1.77 million) as well as San Diego, Orange, Ventura and Imperial counties combined (1.69 million). As a separate state, the Inland Empire’s January 2006 population of 3.9 million people was above 24 states, having recently passed Oregon (3.6 million) and Oklahoma (3.5 million) and Connecticut (3.5 million). The Inland Empire had $98 billion in total personal income during 2004. That tied Oklahoma and was more than 21 states. By 2006, Oklahoma is likely smaller as well.
Researchers attribute the Inland Empire’s strong performance to the way Southern California’s geography and economic behavior interact. Since World War II, the region has grown outward from central Los Angeles. At various times, this has made places like Orange County and the San Gabriel Valley the centers of West Coast growth. Inevitably, once coastal county congestion caused their land and space costs to rise, this activity was forced into the Inland Empire.
This pattern underlies the Inland Empire’s job performance. From 1990-1994, Southern California suffered a severe recession and decline in employment. However, there was no period when the Inland Empire’s employment stopped growing. Thus, from 1990-2005, the region added 500,192 jobs versus 317,205 in Orange County and 315,150 in San Diego County. From 2000-2020, it is forecasted to add far more jobs (798,815) than Los Angeles County (345,202) and nearly as many as San Diego, Orange, Ventura and Imperial counties combined (833,520). In 2005, its 56,658 new jobs were more than Orange and San Diego counties combined (53,775). L.A. added just 19,950.
In part, the development of the Inland Empire is occurring because it is the last area of Southern California to have large amounts of undeveloped land along urban transportation corridors. This available “dirt” creates a location advantage for both high-end and affordable home buyers and industrial/commercial developers. Thus, in the inland region, space is available and less expensive. Thus, the homes and buildings constructed on it sell or lease for much less than in the coastal counties. For instance, in 1st quarter 2006 median priced homes reached extraordinary levels in Los Angeles ($503,000), San Diego ($515,000), Orange ($675,000) counties. All kinds of families have thus been forced to migrate to the more reasonably priced Inland Empire ($390,000). This has increasingly included large numbers of professionals, technicians and executives who are migrating to the area’s rapidly growing base of upscale neighborhoods.
Similarly, the Inland Empire’s industrial property, much of which is new, enjoys a price advantage. In March 2006, 350,000 square feet of space leased for $1,968,000 a year. That was a savings of $480,000 to $3,400,000 compared to the various sub-markets of the coastal counties. Also, 10,000 square feet of office space leases for $216,000 a year, a savings of $6,000 to $86,400 compared to other Southern California areas. With the second lowest suburban office vacancy rate (7.0%) in the U.S., the migration of office users to the inland area is causing new buildings to go up in the area’s major centers.
The Inland Empire’s rapid population growth has created a less obvious advantage for firms locating in cities like Murrieta. People will work for less to avoid commuting to coastal counties. In 2002, 31% of commuters to Orange County would take 15% less pay for an inland job; 23% of those commuting to L.A. County would take 10% less. These are powerful incentives for firms to migrate inland. Importantly, many new Inland Empire workers, like those moving to Murrieta, are well-educated. As indicated, from 2000-2005, the number of adults with B.A. degrees and above went from 312,257 to 431,452, up 119,195 (38.2%).
Nearly all cargo that flows into and out of Southern California passes through the Inland Empire because Cajon Pass (I-15, BNSF railroad) and San Gorgonio Pass (I-10, UP railroad) are the principal trucking and rail routes to the balance of the United States. Even cargo leaving San Diego County must move up the I-15 freeway. This location advantage, combined with available inexpensive land, has made this region the Southland’s new logistics capital. Firms save time in getting their products to market by locating within the region.
Increasingly, the Inland Empire’s transportation system is seen as a competitive advantage. BNSF Railway’s intermodal railroad yard in San Bernardino processed 554,904 containers in 2005. Strong demand is forcing them to double that capacity. Union Pacific Railroad has its main switching yard in Colton and is seeking an intermodal site. Container traffic through the ports of Los Angeles and Long Beach is soaring and creating demand for inland facilities to process import goods.
Meanwhile, most of Southern California’s Less Than Load (LTL) trucking firms have their cargo sorting facility in the inland area. And, UPS (Ontario International Airport) and Federal Express Ground (Rialto) process most of their Southern California cargo in the area. DHL just opened its western regional hub at March Air Reserve Base. Ontario International Airport (ONT) is the second largest air cargo airport in the Southland. By 2030, it is forecasted to almost equal LAX in volume. March Air Reserve Base near Murrieta will rank third. ONT is also the second busiest air passenger facility, handling 7.2 million people in 2005. Its volume is forecasted to reach 30 million passengers in 2030.
Air quality in the Inland Empire has improved dramatically with smog levels over the federal limit dropping from 208 days in 1977 to 30 in 2005. Often, people and firms locate in Southern California for its extraordinary climate. The Murrieta area’s wintertime temperature falls to an average of just 58 degrees. Its summer average high is 98 degrees in July.
