Riverside-San Bernardino Industrial Market Report

Enacted legislation impacts pipeline. The Inland Empire’s industrial sector is in transition. Vacancy is near a 15-year high, and recent increases in shipping costs could influence local demand, as the metro is the initial offloading destination for many TEUs arriving at the ports of Los Angeles and Long Beach. Additionally, after five years of development activity that saw 107 million square feet of space come online, the market is expected to register its smallest delivery slate since 2012 at roughly 10 million square feet. The Mojave River Valley adds the most space among submarkets, a historical first that should provide some near-term relief to other larger areas that have shouldered the bulk of recent supply additions. The pullback in completions may extend beyond this year as California Assembly Bill 98, which established strict development regulations for Inland Empire warehouses and distribution centers, took effect in 2026. Should this materialize, a share of the metro’s supply overhang should be occupied over time, as roughly 8 million square feet of 2020s-built space was absorbed over the 12-month period ending in March.