The Inland Empire industrial market turned a corner in Q3, and anyone with a lease expiring in the next two years should pay attention.
What changed
Vacancy fell to 8.81%, down from 9.21% last quarter.
Net absorption was positive 3.2M SF after a negative Q2.
Building sales hit $1.5B, the strongest quarter in three years.
What matters more: new supply is drying up
Only 2.4M SF has been delivered so far this year, and just 8.4M SF is under construction. Sublease space has dropped from its 18.4M SF peak to 15.3M SF. If demand holds, the oversupply gets absorbed with little new product to replace it.
Still a tenant’s market
Availability is 12.98%, asking rents are flat at $0.98 NNN and down roughly a third from four years ago, and landlords are still giving real concessions. Note pricing variety depending on geography and building size.
Rates and the midterms
The Fed held at 3.75% to 4.00% on October 28 on a 10-2 vote, so financing stays expensive. That keeps developers sidelined, which supports the supply story above. Election noise on November 3 may delay some decisions, but it doesn’t change the fundamentals.
What I’d do
Tenants with 2027 or 2028 expirations: Finding a building, negotiating and building out can take 12 to 18 months. Starting now means negotiating from today’s leverage, not reacting to a tighter market.
Tenants weighing a purchase vs. a lease: With rates elevated and rents still soft, leasing makes more sense today. That math can flip if supply keeps tightening and rates eventually come down, so run both scenarios before your next decision.
Owners: Price for today’s market, not 2028’s. Supply is moving your way, but tenants still have options.
Thinking about your next move? Call me and I’ll walk you through the numbers for your submarket.
John Viscounty | Senior Vice President, Partner
Voit Real Estate Services
3280 E Guasti Rd. Suite 100 | Ontario, CA 91761
D (909) 545-8002
jviscounty@voitco.com | www.voitco.com
Real Estate Salesperson, Cal BRE, License #02028915