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12/30/25
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This report provided by real estate services firm Kidder Mathews
Market Highlights
• In 2025, the inland empire's direct market vacancy rate for the final year was 7.2%.
• At the 2025 end, the consistent average is $1.00/sf, triple net lease (NNN)
• Sales had an average price of $208.65 per square foot and an average cap rate of 4.3%.
Market Drivers
As 2025 draws to a close, the Inland Empire industrial market continues to recalibrate. Major distributors and e-commerce companies still favor contemporary, high-clear big-box facilities near ports and rail connections, despite significant move-outs from mid-aged buildings. Leasing activity remained steady throughout 2025 due to new supply and tenant relocations driven by large modern logistics requirements, along with a few midsize and smaller deals.
Subleases account for roughly 20% of the available space, which is keeping rents down and prompting incentives such as improvement allowances and rent-free periods.
The availability rate increased to 11.9%, and the vacancy rate rose to 8.7%, reflecting additional space from recently completed buildings and new lease listings. Several significant leasing deals occurred over the past year, including Maersk (1 msf) in Hesperia, iDC Logistics (844k sf) in San Bernardino, and other deals ranging from 600k sf to 850k sf—indicating ongoing tenant interest, though it remains somewhat selective.
Near-Term Outlook
In 2026, underlying market trends are expected to stabilize and then gradually weaken, as new construction completions remain below historical norms while absorption experiences a substantial increase. With upcoming building deliveries, vacancy rates may see a short-term rise, followed by a decline as more space is filled—particularly in large-scale logistics facilities near ports, which are difficult to replicate.
This trend’s impact should diminish by the end of 2026, driven by the occupancy of recently signed large leases and a slowdown in new construction.
Metric 4Q25 3Q25 4Q24 % Change From a Year Ago
Direct Vacancy Rate 7.2% 7.3% 6.2% 15.90%
Total Availability Rate 12.7% 12.1% 11.1% 13.99%
Direct Asking Lease Rate $1.00 $1.02 $1.12 -10.71%
Total Lease Transactions 5,602,858 15,864,749 11,091,057 -49.48%
Sale Transactions 2,940,668 2,352,859 2,423,844 21.32%
Direct Net Absorption 1,684,146 -980,778 2,796,889 N/A
The information in this report was prepared by the Kidder Mathews Research Group, led by Gary Baragona, Vice President of Research. Data source: CoStar.
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