The Inland Empire (Riverside and San Bernardino counties) remains the critical logistics backbone of the Western United States. However, as we move through the first half of 2026, the region’s industrial and warehouse real estate market is undergoing a significant recalibration. For tenants, investors, and developers, understanding current vacancy rates and recent market shifts is crucial for navigating this transitional period.
Current Vacancy Rates (Q1 2026)
As of the first quarter of 2026, the overall industrial vacancy rate in the Inland Empire stands between 7.7% and 7.8%. This represents a noticeable softening compared to the hyper-competitive, ultra-tight market conditions seen during the post-pandemic logistics boom.
It is important to note that the Inland Empire is not a monolith, and vacancy varies significantly depending on the submarket:
- Inland Empire West (Ontario, Rancho Cucamonga, Chino): This core, infill market remains relatively tighter, with vacancy rates sitting between 6.0% and 6.5%. Because land availability is virtually nonexistent, this area retains stronger landlord leverage and higher asking rents (averaging around $1.15 PSF).
- Inland Empire East (Perris, Moreno Valley, Beaumont): This growth engine submarket currently faces much higher availability, with vacancy rates hovering between 9.0% and 10.4%. This higher rate is driven by a combination of excess vacant inventory and recent large-scale tenant move-outs.
The 6- to 12-Month Trend: A Steady Climb
Over the past year, vacancy rates have trended consistently upward, transitioning the region from a landlord-dominated market to one that temporarily favors tenants.
Inland Empire Industrial Vacancy & Rent Trends (Past 12 Months)
| Timeframe | Overall Vacancy Rate | Average Asking Rent (PSF NNN) | Market Indicator |
| Q1 2025 | ~6.1% | $1.04 – $1.12 | Modest softening begins |
| Q4 2025 | ~7.2% – 7.5% | $1.00 – $1.10 | Supply outpaces demand |
| Q1 2026 | ~7.7% – 7.8% | $0.97 – $1.09 | Tenant negotiating leverage peaks |
Key Drivers Behind the Upward Trend:
- A Surge in Deliveries: The primary driver of rising vacancy has been the completion of massive construction projects initiated during the 2022-2023 boom. In 2025 alone, over 12.7 million square feet of new product was delivered, temporarily outpacing tenant demand.
- Large Occupier Move-Outs: The first quarter of 2026 saw significant move-outs in the 500,000+ square foot size range, resulting in negative net absorption across the market.
- Tenant Caution: While leasing activity remains active (with over 7.5 million square feet leased in Q1 2026), many occupiers have paused expansion plans or consolidated operations in response to shifting consumer demand and geopolitical uncertainties.
The Future Outlook: The Looming “Supply Gap”
While the headline news highlights rising vacancy and softening rents, industry experts are closely watching the construction pipeline, which tells a different story for late 2026 and 2027.
- The Construction Pipeline Has Stalled: Due to elevated interest rates and tighter equity capital in 2024 and 2025, speculative ground-up development has plummeted. New construction starts have dropped by over 50%.
- The Supply Gap: Because it takes 18 to 24 months to deliver Class A industrial product, the lack of new groundbreakings over the past year means a “supply gap” is looming. As current available inventory is gradually absorbed throughout 2026, almost no new inventory will be delivered to replace it.
- Market Stabilization: Vacancy rates are anticipated to peak in mid-2026 before declining as the pipeline empties out.
Take Away:
The Inland Empire industrial market is currently in a unique transition window. For tenants, the next 6 to 12 months present a rare opportunity to secure favorable lease terms, rent abatements, and tenant improvement allowances before inventory inevitably tightens again. For investors, stabilized cap rates (currently ranging from 5.0% to 6.25% depending on the submarket) offer a chance to acquire assets before the impending supply shortage drives values back up in 2027.
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