Q2 2023 Industrial Market Outlook – Inland Empire


The Inland Empire’s industrial market is undergoing a shift as it moves away from the previously high demand for warehouse and distribution space. This shift has resulted in an increasing amount of vacant excess space entering the market for sublease. The market has experienced a surge in the rate of sublease space being marketed, witnessing an 86% increase compared to the previous quarter and a significant 279% increase compared to a year ago. As of midyear 2023, the total vacant sublease space amounts to 4.1 million square feet, which is 2.5 times higher than the level observed during the Great Recession in Q2 2009.


Companies that expanded their warehouse/distribution space during the pandemic to meet the surge in e-commerce have continued to reduce excess space. In Q2, the industrial market reached an all-time high in the amount of available space for sublease, indicating that companies exceeded their space requirements. This has resulted in an oversupply of space coming on the market. During the second quarter, approximately 1.9 million square feet of additional vacant sublease space was listed, representing the largest quarter-over-quarter increase on record. Additionally, 4.1 million square feet of vacant space was added to the market directly, including 2 million square feet of completed construction.