Owner-Users Step Up as Rising Rates Test Buying Power
The Southern California industrial market continues to evolve in 2026, with sale activity increasingly defined by a single dynamic: owner-users stepping in where investors have pulled back. As financing costs remain elevated, the buyer pool for industrial product has narrowed, and that shift is reshaping both deal volume and pricing expectations across the Inland Empire.
Owner-Users Driving the Sale Market
Unlike the investor-driven cycles of recent years, much of today's sale activity is being led by owner-users — businesses purchasing buildings for their own operations rather than as investment vehicles. With leasing economics still favoring tenants in many submarkets, and uncertainty lingering around long-term occupancy costs, more operators are concluding that ownership offers better control over their real estate destiny than continuing to lease. Smaller and mid-size buildings, in particular, are seeing disproportionate interest from owner-users looking to lock in a fixed occupancy cost and build long-term equity rather than remain exposed to renewal risk. This trend is filling a gap left by traditional investors, many of whom remain on the sidelines or are underwriting deals far more conservatively than in past cycles.
Rising Rates Are Compressing Buying Power
The headwind working against this momentum is the interest rate environment. As borrowing costs have climbed, the amount of debt a buyer can service on a given cash flow has shrunk — even for well-qualified owner-users. The practical effect is that buyers today can afford meaningfully less building than they could when rates were lower, even with the same equity and the same income profile.
For sellers, this is the part of the story that matters most: less buying power on the demand side puts direct downward pressure on achievable pricing. Buyers are adjusting their offers to reflect higher carrying costs, which means sellers who anchor to pricing expectations from a lower-rate environment risk longer marketing periods and price reductions. Properties that are priced with current financing realities in mind are transacting; those priced for yesterday's rate environment are sitting.
What This Means for Owners Considering a Sale
Owner-user demand is currently one of the more reliable sources of sale activity, particularly for buildings under 100,000 SF
Buyers' effective purchasing power has declined as rates have risen, even where demand and interest remain present
Sellers should expect more rate-sensitive underwriting from buyers, and pricing strategies need to account for this rather than relying on comps from prior, lower-rate periods
Deals that reflect current cost-of-capital realities are moving; those that don't are experiencing extended time on market
Looking Ahead
The combination of motivated owner-user buyers and a more expensive cost of capital is creating a market that rewards realistic pricing and penalizes optimism. Sellers who price to today's buyer pool — rather than yesterday's environment — are the ones closing deals. For owners evaluating a sale, understanding where your asset sits relative to current owner-user demand and current financing costs is the difference between a clean transaction and a stale listing.
If you're considering a sale, lease, or want an updated opinion of value that reflects current buyer behavior and financing conditions, feel free to reach out.