Inland Empire Industrial Market
Leasing activity remains below the pre-pandemic average as elevated rents, a subdued retail sales outlook and high capital costs continue to crimp tenant demand. A cluster of tenant move-outs in the 200,000 SF+ size segment contributed to the largest quarterly net absorption loss in market history (-2.6 MSF). These, paired with vacant construction deliveries, pushed vacancy to an 11-year high. Available sublease space reached 19.6 MSF, a new peak. Class A start rents in the West decreased by 24.2% over the last four quarters. A sizeable drop, but not a severe one when considering rents grew by 142.4% from early 2021 to early 2023 . 10.7% of the 25.3 MSF under-construction pipeline has pre-leased. The 1.0 MSF+ segment is performing better than smaller thresholds.
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