Inland Empire industrial market report
Q2 2024
The Inland Empire industrial market experienced improvements in Q2 2024. Sublet availabilities decreased for the first time since Q3 2021, with over 2.4 MSF of sublet space leased, a 16.4% increase from the previous quarter. Driven by logistics occupiers, there were 9 sublease deals above 100K SF. Initially, sublet availabilities surged due to consolidations and reduced consumer demand, adding over 11.8 MSF since Q1 2023. Average lease rates had soared during the pandemic but have dropped 17.2% since Q3 2023 to $1.30/SF due to decreased leasing volumes and landlords have begun to offer additional incentives to attract tenants. Amazon remains active in the market with another million square foot lease, marking their third deal over a million square feet in the first half of 2024.
Inventory
There is currently 19.8 MSF of industrial product under construction. In total, there is 595.6 MSF of industrial product in the Inland Empire.
Net absorption
During Q2 2024, the Inland Empire industrial market bounced back with 3.2 MSF of positive net absorption.
Asking rent
Average asking lease rates have dropped 17.2% since Q3 2023 to $1.30/SF NNN. Landlords have begun to offer additional abatements as well as first-year teaser rates on some properties in order to attract tenants.
Availabilities
Total available direct space increased to 61.5 MSF and sublet space dropped for the first time since Q3 2021 with 18.5 MSF in the second quarter.
Vacancy
Total vacancy this quarter registered at 7.7% with 5.5% being direct and 2.2% being sublet.
Investment sales
Investment sales continue to remain stagnant with sale prices registering at $274 psf and sale volumes registering at $1.8B for the first half of 2024.
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