— By Richard Schwartz of SRS Real Estate Partners —
The Inland Empire industrial market has undergone significant recalibration over the past 24 months, moving from the “too hot” environment of 2022 and 2023 marked by record construction and rent escalation to a period of normalization.
Construction-driven vacancy has pushed the market into a digestion phase, marked by softening rents, adjusting sale prices and a reset in landlord-tenant expectations.
These dynamics will unlock new opportunities as we enter 2026.
Limited New Development Creates Breathing Room
CoStar data compiled by SRS shows that new construction peaked in 2023 with about 29.5 million square feet delivered. This was followed by 17.8 million square feet in 2024 and an expected 16 million square feet in 2025. Deliveries are projected to fall to roughly 10 million square feet in 2026, making it the lightest post-pandemic year of new supply.
This delivery includes several notable projects, such as Amazon’s 2.5-million-square-foot “middle-mile” facility in Hesperia, a 650,000-square- foot storage facility in Desert Hot Springs and a 1.2-million-square-foot facility in Apple Valley that’s leased to Lecangs. This means that more than half of the Inland Empire’s 2026 construction pipeline is already pre-leased, reducing speculative exposure while accelerating the rise of the North Inland Empire and Coachella Valley submarkets as legitimate logistics submarkets rather than secondary alternatives.
Rental, Sales Expectations Reset
After peaking at $1.65 triple net in 2023, asking rents have receded to $1.03 triple net, a 37 percent decline and a return to mid-2022 pricing. Sales values have corrected more modestly, falling from roughly $270 per square foot in 2024 to $240 per square foot in 2025, a 10 percent decrease.
As capital markets remain selective, the buyer pool is led by private investors, 1031 exchange buyers, owner-users and private individuals. Tenants looking to expand include third-party logistics providers, retail distributors and users moving from infill Los Angeles. These tenants are securing improved concessions, more flexible terms, and greater leverage during renewals and expansions.
Tenants face increased cost pressure from labor, utilities and freight but can now negotiate and lock in meaningful occupancy cost savings, allowing many to take advantage of what is likely to be a limited-time opportunity.
A Transformational Year Ahead
With tariff concerns stabilizing and expectations for interest rate relief growing, 2026 will be a time where long-term assumptions are tested and new growth is found in unexpected places, including new markets, new tenants and new owners.
The new year represents a rare moment for tenants and future owners where availability, pricing and leverage converge. The tenants and buyers who can act decisively will secure space, control costs and position themselves for the Inland Empire’s next growth cycle.
— By Richard Schwartz, executive vice president of SRS Real Estate Partners. This article was originally published in the December 2025 issue of Western Real Estate Business.