Inland Empire industrial real estate market report
Q4 2023
The Inland Empire industrial remains to be one of the nation’s top markets for industrial real estate but after a surge in expansion efforts due to the pandemic, it has begun to correct itself. Leasing activities have trended downwards with many occupiers putting a halt on expansion efforts and instead are relinquishing any unused space that was acquired during the pandemic. Lease rates continue to remain at all-time highs, but the rate of growth has plateaued with average asking rates remaining flat in the fourth quarter at $1.45/sf NNN. However, there is still demand stemming from large ecommerce and logistical occupiers throughout the market with Maersk leasing over 1.2 msf in Hesperia.
Inventory
There is currently 28.4 million square feet of industrial product under construction. In total, there is 589.8 million square feet of industrial product in the Inland Empire market.
Net absorption
During 4Q 2023, the Inland Empire industrial market rebounded after reporting slow activity throughout the year with 4.8 million square feet of positive absorption. This is attributed to large occupiers moving into their million square foot facilities.
Asking Rent
Average asking rent growth has cooled down after surging between 2022-2023, where rental growth was between 15%-20%. Since then, rates have remained flat at $1.45/sf NNN.
Availabilities
Total available direct space decreased to 53.6 msf and sublet space increased further to 15.6 msf in the fourth quarter.
Vacancy
Total vacancy this quarter registered at 6.2% with 4.6% being direct and 1.6% being sublet. Sublet vacancies are up 70 basis points from the prior quarter.
Investment sales
Investment sales continue to decrease with sale prices registering at $258.91 psf and sale volumes registering at $2.88B.
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