MARKET DRIVERS
THE INLAND EMPIRE logistics region is a significant target for developers since it is home to many of the largest industries in the country. Value-add investors interested in upgrading and making money from below-market rents have expressed interest in the substantial rent rises seen across several property types.
VALUE-ADD INVESTORS eager to make upgrades and benefit from below-market rents have showed strong interest due to the substantial rent increases seen across several property types.
MOST NET ABSORPTION comprises large warehouse and distribution facilities, which are still in high demand due to a rise in the involvement of logistics and e-commerce firms in these construction projects. Shein Distribution Corporation (1.8M SF), Skechers USA, Inc. (1.0M SF), and Fellowship Warehousing & Logistics (330K SF) are among the latest tenants.
ECONOMIC OVERVIEW
THE ADJUSTED UNEMPLOYMENT RATE for the Inland Empire rose to 4.2% in November 2022 from 4.0% the previous year.
THE INLAND EMPIRE METRO AREA, which comprises Riverside and San Bernardino, is one of the nation’s fastest-growing labor markets. Retirement communities have a disproportionately high need for health and education services, and employment in the sector is increasing annually.
NEAR TERM OUTLOOK
THE INLAND EMPIRE is one of the largest industrial markets in the country. The constant demand from warehousing and logistics firms has kept vacancies at a low level relative to the rest of the country, and new tenants typically choose to lease or buy new construction since there is so little space available in older structures.
THE DEVELOPMENT of online shopping and the need to increase distribution efficiency at the final step has contributed to the Inland Empire’s availability of new, cutting-edge logistics facilities. Currently, 37.4M SF of space is being developed, with almost 40% already preleased.
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