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April 22, 2024
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Industrial Construction Picks Up in the Inland Empire


This update was provided by real estate services firm NAI Capital

A year into the pandemic, rising rents and soaring demand for warehouses motivated developers to bring new projects online in the Inland Empire. Industrial space under construction jumped 24.4% from the prior quarter, up 14.4% compared to last year at 22.4M square feet.

Leasing volume totaled 11.49 msf in the first quarter of 2021, while completed construction added to the market totaled 2.8 msf. The supply of completed construction remained well below demand, encouraging more development in the region.

Year-over-year, the market absorbed over 26.6 msf, compared to approximately 21.2 msf of completed construction added over the same time. The acceleration of ecommerce during the pandemic boosted demand for large distribution centers. Over the past year, five mega warehouse/distribution facilities larger than 1 msf each were completed, and all were 100% leased.

Trends to Watch

The depletion of land in the West submarket will continue to drive up development, land, rent, and sales prices in the East Inland Empire. Developers in the East stepped construction up 38.2% from the previous quarter, as demand for large distribution centers persisted.

Land for the development of mega warehouse centers will continue to get scarcer and pricier, fueling higher prices for finished warehouse/distribution space, particularly in densely populated submarkets with lower vacancy that have higher land prices.

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