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Inland Empire Industrial Market Report

4th Quarter 2023

Posted In — Market Research | Market Report

MARKET DRIVERS

The Inland Empire Industrial sector’s 4Q23 review and near-term outlook reflect a landscape
of growth and resilience amidst challenges. As of the fourth quarter of 2023, the sector
experienced a significant uptick in available buildings, fueled by new construction deliveries,
subleases, and portions of larger facilities being offered at competitive prices. This surge was
partly driven by an increase in TEU’s outbound from the LA/Long Beach harbors, setting the
stage for heightened leasing activity in the second quarter of 2024 and beyond. Additionally,
a considerable number of companies and investors, previously on standby, are now poised
to re-enter the market.

Tenants and occupiers will need a little more time to develop confidence in the stability of
the market but are then expected to re-enter in 3Q24 and 4Q24.

ECONOMIC OVERVIEW

The market drivers were offset by the complete collapse of the active tenants in the market.
Therefore, the lack of any scale to observe increased the difficulty in developing marketing
strategies and entitlements. Despite economic challenges, the Inland Empire Industrial’s broad
selection and stable foundation continue to ensure confidence that the future growth path
in the market remains positive in the fourth quarter of 2023-24. The primary ports and transit
centers in the area have shown resilience and are still an incentive for companies and investors.

The Inland Empire Industrial sector also features a considerable number of newly constructed
contemporary, energy-efficient buildings that attract tenants with pre-leased tenant packages.

NEAR TERM OUTLOOK

Major infrastructural upgrades in the Inland Empire played a crucial role in establishing the
area as a premier hub for distribution and warehousing operations. Despite the collapse of
active tenants in the market, which complicated the development of marketing strategies
and entitlements, the sector’s diverse offerings and stable foundation continued to inspire
confidence in its future growth trajectory. The resilience of primary ports and transit centers in
the area further bolstered this optimism, keeping them attractive to companies and investors.

Looking ahead to 2024, the Inland Empire Industrial market is expected to benefit from the steady growth in inbound TEU deliveries and a more stabilized financial market. Although tenants and occupiers may need additional time to build confidence in the market’s stability, a notable re-entry is anticipated in the latter half of the year. Despite potential constraints due to rising development costs amid economic uncertainties, the overall outlook for the Inland Empire industrial sector remains highly positive.

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