Q1 2021 Industrial Market Outlook – Inland Empire

A year into the pandemic, the pace of the Inland Empire’s industrial market changed.
As the economy began to reopen from the Covid-19 shutdown, rising rents and soaring
demand for warehouses motivated developers to bring new projects online. Industrial
space under construction jumped 24.4% from the prior quarter, up 14.4% compared to
last year at 22.4M square feet.

Vacant industrial space decreased 20.4% in Q1 2021 from Q1 2020, while the average
asking rent rose four cents from the prior quarter to $0.75/SF triple net, up 1.4% from Q1
2020. The vacancy rate remained at an all-time low 3.6%, down 100 bps from Q1 2020,
despite more than 2.8M square feet of completed construction added to the market
in Q1 2021. Year-over-year, the market absorbed over 26.6M square feet, compared
to approximately 21.2M square feet of completed construction added over the same
time. The acceleration of ecommerce during the pandemic boosted demand for large
distribution centers. Over the past year, five mega warehouse/distribution facilities larger
than 1M square feet each were completed, and all were 100% leased.

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