Inland Empire normalising

Southern California’s warehouse capital is no longer acting like a market where every empty box gets snapped up by dinner time. In the first quarter of 2026, new industrial completions in the Inland Empire fell to 1.6 million square feet, down 32.2% from the prior quarter and 41.3% from a year earlier. (naicapital.com) That slowdown matters because the Inland Empire is enormous: the region now has about 756.9 million square feet of industrial space spread across Riverside and San Bernardino counties. When a market that big stops adding buildings at boom-era speed, it usually means developers think the easy demand is gone. (naicapital.com) The Inland Empire became the logistics backyard for the ports of Los Angeles and Long Beach, where imported goods land and then move inland into giant warehouses near Interstate 10, Interstate 15 and State Route 60. That location turned places like Ontario, Fontana and Moreno Valley into the default parking lot for Southern California’s supply chain. (commercialsearch.com) During the pandemic boom, retailers and logistics firms grabbed space as if running out of warehouse shelves was worse than overpaying for them. Now the market is working through the opposite problem: too much recently built space and fewer tenants willing to take million-square-foot blocks all at once. (cbre.com, savills.us) That split is showing up in vacancy data, but not evenly. Savills put Inland Empire industrial vacancy at 9.9% in the first quarter of 2026 after four tenants with more than 1 million square feet each moved out, while CBRE measured 7.8% in the Inland Empire Core, which covers a tighter slice of the market. (savills.us, cbre.com) That is why brokers keep talking about a two-speed market instead of a collapse. CBRE said new leasing still reached 13.6 million square feet in the quarter, but the pain was concentrated in very large buildings, especially 500,000-square-foot-plus boxes hit by big move-outs. (cbre.com) Landlords are reacting differently depending on what they own. NAI Capital said asking rents in the Inland Empire softened to $0.95 per square foot in the first quarter, and Kidder Mathews said tenants still hold negotiating leverage as pricing and lease terms have not fully stabilized. (naicapital.com, kidder.com) Los Angeles County looks even tighter on land and older on buildings, but it is showing the same cooling pattern. Savills said Los Angeles industrial vacancy rose to 7.3% in the first quarter, and overall asking rents fell to $1.29 per square foot, the twelfth straight quarterly decline. (savills.us, savills.co.uk) So the headline is not that Southern California’s warehouse machine stopped working. The headline is that it is starting to look normal again: fewer new buildings, more tenant bargaining power, and a widening gap between top-tier logistics facilities and generic space that now has to compete with concessions. (naicapital.com, kidder.com, cbre.com)