Inland Empire vacancy rising
What happened
Vacancy in the Inland Empire is climbing as high operating costs and regulatory pressure make the market less resilient than before. Social posts flagged specific cost burdens—about $0.45/kWh electricity and $25/hr minimum wages—and noted developers are shifting toward build‑to‑suit work as rents soften (x.com) (x.com).
Why it matters
Industrial vacancy in the Inland Empire has climbed into the high single digits in recent quarters while asking rents have retraced roughly a third from their 2023 highs, putting visible downward pressure on market absorption. (colliers.com) (cushmanwakefield.com) Developers are dialing back speculative projects and increasingly building only after signing a tenant — a strategy called build‑to‑suit, where a developer constructs a facility specifically for a single tenant rather than building first and marketing the space — and overall new construction deliveries and starts have fallen to multi‑year lows. (theregistrysocal.com) (colliers.com) Two operating‑cost levers are central to the recent shift: electricity and payroll. California utilities now price commercial power with time‑of‑use schedules (different rates depending on the hour of day) and demand charges (a separate fee based on the customer’s peak power draw), which can push effective energy costs for industrial users into the high tens of cents per kilowatt‑hour during peak hours — ranges industry analyses show can approach forty to fifty cents per kilowatt‑hour under certain tariffs and peak usage patterns. (instantondemandsolar.com) (nrel.gov) Labor‑cost increases and local wage policies are adding to that pressure: the statewide minimum wage rose to $16.90 per hour on January 1, 2026, and several local or sector‑specific wage floors and living‑wage campaigns have set or proposed higher pay levels, which raise occupiers’ ongoing payroll expenses and therefore reduce the rent level they can support in total occupancy cost calculations (operating expenses plus rent). (dir.ca.gov) (vidahr.com) (cd13.lacity.gov) The combination of rising availability of sublease space, lower asking rents, and developer caution is changing transaction dynamics: landlords are seeing more tenant selectivity, leasing velocity has slowed, and sublease listings remain a meaningful share of total available inventory, all of which are cited in the regional market reports tracking this recalibration. (colliers.com) (avisonyoung.us) Key hard numbers market professionals are watching this cycle include mid‑to‑high single‑digit vacancy rates (around 7.5–8.1 percent depending on the report), roughly 4.3 million square feet of new supply delivered in the most recent quarter, and asking rents that are approximately 30–37 percent below the 2023 peak — figures that explain why speculative starts have slowed and why build‑to‑suit is the preferred path for many owners and institutional developers. (cbre.com) (colliers.com) (avisonyoung.us)
Key numbers
- Social posts flagged specific cost burdens—about $0.45/kWh electricity and $25/hr minimum wages—and noted developers are shifting toward build‑to‑suit work as rents soften (x.com) (x.com).
- Industrial vacancy in the Inland Empire has climbed into the high single digits in recent quarters while asking rents have retraced roughly a third from their 2023 highs, putting visible downward pressure on market absorption.
Quick answers
What happened in Inland Empire vacancy rising?
Vacancy in the Inland Empire is climbing as high operating costs and regulatory pressure make the market less resilient than before. Social posts flagged specific cost burdens—about $0.45/kWh electricity and $25/hr minimum wages—and noted developers are shifting toward build‑to‑suit work as rents soften (x.com) (x.com).
Why does Inland Empire vacancy rising matter?
Industrial vacancy in the Inland Empire has climbed into the high single digits in recent quarters while asking rents have retraced roughly a third from their 2023 highs, putting visible downward pressure on market absorption. (colliers.com) (cushmanwakefield.com) Developers are dialing back speculative projects and increasingly building only after signing a tenant — a strategy called build‑to‑suit, where a developer constructs a facility specifically for a single tenant rather than building first and marketing the space — and overall new construction deliveries and starts have fallen to multi‑year lows. (theregistrysocal.com) (colliers.com) Two operating‑cost levers are central to the recent shift: electricity and payroll. California utilities now price commercial power with time‑of‑use schedules (different rates depending on the hour of day) and demand charges (a separate fee based on the customer’s peak power draw), which can push effective energy costs for industrial users into the high tens of cents per kilowatt‑hour during peak hours — ranges industry analyses show can approach forty to fifty cents per kilowatt‑hour under certain tariffs and peak usage patterns. (instantondemandsolar.com) (nrel.gov) Labor‑cost increases and local wage policies are adding to that pressure: the statewide minimum wage rose to $16.90 per hour on January 1, 2026, and several local or sector‑specific wage floors and living‑wage campaigns have set or proposed higher pay levels, which raise occupiers’ ongoing payroll expenses and therefore reduce the rent level they can support in total occupancy cost calculations (operating expenses plus rent). (dir.ca.gov) (vidahr.com) (cd13.lacity.gov) The combination of rising availability of sublease space, lower asking rents, and developer caution is changing transaction dynamics: landlords are seeing more tenant selectivity, leasing velocity has slowed, and sublease listings remain a meaningful share of total available inventory, all of which are cited in the regional market reports tracking this recalibration. (colliers.com) (avisonyoung.us) Key hard numbers market professionals are watching this cycle include mid‑to‑high single‑digit vacancy rates (around 7.5–8.1 percent depending on the report), roughly 4.3 million square feet of new supply delivered in the most recent quarter, and asking rents that are approximately 30–37 percent below the 2023 peak — figures that explain why speculative starts have slowed and why build‑to‑suit is the preferred path for many owners and institutional developers. (cbre.com) (colliers.com) (avisonyoung.us)
