Inland Empire industrial market report
Q3 2024
The Inland Empire's industrial market experienced a cooling in Q3 2024, with sublease availability surpassing 19 million square feet after plateauing in the previous two quarters. Following the pandemic-driven surge in demand between 2020 and 2023, leasing activity has slowed as occupiers have become more selective with industrial spaces. This has led to a 21.7% drop-in average lease rates since Q3 2023, bringing prices down to $1.23/SF. In response, landlords have offered incentives like rent abatements to attract tenants. Although leasing volume decreased in Q3 2024, the number of deals increased, with 99 transactions completed, though the average deal size shrank, reflecting tenants' focus on operational efficiency over expansion.
Inventory
There is currently 16.5 MSF of industrial product under construction. In total, there is 605.5 MSF of industrial product in the Inland Empire.
Net absorption
During Q3 2024, the Inland Empire industrial market pulled back with 1.3 MSF of negative net absorption.
Asking rent
Average asking lease rates have dropped 21.7% since posting highs in 2023 to $1.23/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 10.0% and sublet space increased to 3.1% in Q3 2024.
Vacancy
Total vacancy this quarter registered at 9.1% with 6.9% being direct and 2.2% being sublet.
Investment sales
Investment sales for the first three quarters of 2024 registered at $281/SF with a sales volume of $2.6B.
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