Riverside-San Bernardino Industrial Market Report

Development pullback cushions tariff-driven consolidation. As California’s primary cargo freight hub, the Inland Empire is bearing the brunt of tariff-driven import declines. Early second-quarter data shows over 4 million square feet of negative net absorption, with Riverside and San Bernardino seeing the largest tenant move-outs. Import-reliant firms like DHL Supply Chain and Kohl’s have relinquished space, contributing to a broader trend of big-box tenants vacating distribution facilities over 300,000 square feet, where vacancy is nearing 10 percent. While domestic-facing users such as medical and food distributors should remain more resilient, leasing activity will likely stay subdued as tenants await trade policy clarity. Nevertheless, total delivered industrial space in 2025 is set to fall by nearly 50 percent from the prior three-year average, helping limit further vacancy increases. Longer term, completions are expected to moderate after California enacted stricter warehouse development rules — including deeper setbacks, mandatory truck-route planning and upgraded energy standards — with full rollout set for January 2026.