Inland Empire Q1 2020 Industrial Market Outlook
Market Overview
After a decade of unprecedented growth, the Inland Empire’s industrial market seemed to peak in 2019 followed by the COVID-19 outbreak. The current Q1 2020 data does not fully reflect the pandemic shutdown and the economic impact on the market. Asking rent for industrial space in the region this quarter was $0.74/SF, down 3.9% from the prior quarter but up 5.7% from Q1 2019. Vacancy declined 10 bps from Q4 2019 to 4.6%, up 10 bps from this time last year. The steadiness of the vacancy rate is particularly impressive given the 5.2M SF of construction completed in the quarter. About 53.5% of the construction completed in 2020 remained available at the end of Q1 while construction exceeded 19.3M SF. This is down 37.1% from the 30.7M SF underway at the end of Q1 2019. The fact that this is one of the lowest construction volumes in the last five years underscores the demand for state-of-the-art warehouse distribution facilities that fueled the market for the last decade.
Market Outlook
Trends to Watch
- Tenants evaluating their businesses; defaulting or restructuring leases
- Landlords offering concessions; providing rent abatement or deferment
- Rents and sales prices dropping until certainty is restored
Inland Empire Industrial Market
Average Asking Rent & Vacancy Rate
