Feb. 5--It's no secret the Inland Empire's struggling economy is meddling with every real-estate sector in the market.

But getting some insight into what's in store for 2009 and 2010 could be valuable.

That's what local business professionals sought at Wednesday's annual Real Estate Update, held at Rancho Cucamonga's Victoria Gardens Cultural Center and hosted by the Riverside-based Inland Empire Economic Partnership.

Before the event, we asked the experts on the real-estate panel their thoughts on the Inland Empire's residential, office, industrial and retail markets. Here's what they had to say:

RESIDENTIAL

JOHN KALMIKOV

Senior vice president at Lee and Associates, Riverside

Unemployment is having a strong impact (on apartment vacancies). Given that, we're seeing that location is critical.

West of the 15 Freeway, the vacancy rate is relatively stable; however, east of the 215, the vacancy rate is double digits.

The San Bernardino market will rise a bit, but Moreno Valley will rise even more. (We might have) 12-14 percent in some areas.

If you buy (an apartment complex) that's closer to jobs, you'll do fairly well. But if you buy in the outlying areas, you're going to get hit by the job losses and foreclosures with softening rents and vacancy rates.

As far as single-family homes go, values have dropped substantially.

However, if you look at the

median income, the values need to drop another 20 percent in order for homeowners to qualify or for investors to invest in some of these houses.

Once you get to the realistic values, money will be spent, and we'll start turning around.

In the next five years, we'll need to create jobs that will create buyers who will occupy these homes. Builders will start building smaller houses again.

OFFICE

TOM PIERIK

Senior vice president at Lee and Associates, Riverside

We've built over 4 million square feet (of office space) in the last two years, and we've built it into the struggling economy.

We anticipate we're going to see vacancies increase slightly through the first six months of this year.

We'll slowly eat up the oversupply, but it's going to be a very slow process.

Right now, we have a 21 percent (average) vacancy rate (in the Inland Empire office space market).

The good news is it creates opportunity. There's a window right now to take advantage of excellent lease opportunities. We're seeing significant concessions by owners to discount their lease rates and incentivize tenants.

There are some (would-be) tenants waiting on the sidelines...