Inland Empire’s Industrial Pipeline Slows, Investment Stays Strong

The Inland Empire’s industrial market saw a notable slowdown in development activity through June, with just under 5.8 million square feet underway—less than half the volume recorded during the same period last year. Deliveries also declined sharply, totaling 5.9 million square feet across 15 properties, compared to 14 million square feet delivered in the first half of 2024.

Despite the drop in construction and completions, investor interest remained strong. The metro recorded more than $669 million in industrial sales year-to-date, with pricing among the highest nationally. Leasing activity also helped stabilize fundamentals, keeping the vacancy rate below the U.S. average.

Development activity slows, but projects advance

The Inland Empire’s industrial pipeline had almost 5.8 million square feet under construction year-to-date through June, according to Yardi Research Data. The metro’s 17 under-construction projects accounted for 0.9 percent of the total inventory, much lower than the 1.6 percent U.S. index. 

Among peer markets, Phoenix remained in the spotlight (16.8 million square feet), followed by Atlanta (10.8 million square feet) and Chicago (9 million square feet).

By the end of June, nearly 1.2 million square feet of industrial space had broken ground across 8 properties in the metro—representing 0.2 percent of the total inventory.

IDI Logistics is advancing its development at Perris Logistics Center North, a 2 million-square-foot industrial park in Perris, California. The company broke ground on the second building—a 1 million-square-foot facility—in April 2024, with completion slated for the second quarter of 2025.

Perris Gateway—an 850,000-square-foot industrial facility also located in the Californian city—is currently under construction and expected to be available for lease in 2025. In support of the project, the joint venture between Wildcat Capital Management and DECA Cos. secured $135 million to finance both construction and lease-up efforts.

New supply shrinks sharply year-over-year 

More than 5.9 million square feet of industrial space was under construction in the metro as of June. Overall, 15 properties came online, accounting for 0.9 percent of existing stock, slightly higher than the 0.8 national average.

This represents a huge difference from the 14 million square feet delivered in the same period last year, when 50 properties came online.

Among peer markets, Phoenix (11.2 million square feet) and Kansas City (10.6 million square feet) remained in the lead, while other metros such as Atlanta (3 million square feet), New Jersey (2.9 million square feet) and Indianapolis (752,500 square feet) were at the other side of the spectrum.

Prologis has recently delivered Building 45, a 1.3-million-square-foot facility in Victorville, Calif. The property is located at 19100 Gateway Drive inside of Southern California Logistics Center, a sprawling industrial complex located on the former George Air Force Base.

High prices endure as fewer trades are inked

The Inland Empire’s industrial investment volume has recorded more than $669 million year-to-date through June, with almost 2.7 million square feet of industrial space sold across 20 facilities.

The sale price reached $247.68 per square foot, making the Inland Empire one of the priciest metros in the nation. New Jersey ($245.26 per square foot), Phoenix ($186.30 per square foot) and Atlanta ($151.71 per square foot) also recorded solid price averages, while Chicago ($96.09 per square foot) and Kansas City ($53.42 per square foot) trailed behind.

Bridge Logistics Properties has recently acquired a three-building industrial portfolio in Fontana, Calif., for $83.5 million. The portfolio includes three fully leased distribution facilities—14074 Rancho Court (100,039 square feet), 14019 Rose Ave. (57,654 square feet) and 14928 Washington Drive (175,100 square feet)—all delivered in 2023 and offering a weighted average lease term of more than two years.

Vacancy rate holds below national average

The Inland Empire’s industrial vacancy rate at the end of June was 8.0 percent, coming in 100 basis points lower than the U.S. average rate.

Back in May, CTK USA—the American subsidiary of Korea-based logistics and fulfillment provider CTK—has signed a long-term lease for 250,369 square feet of industrial space in Ontario, Calif. The deal was facilitated by Newmark, which represented the tenant. The lease was signed with Crow Holdings Development.

iDC Logistics has grown its presence in the Inland Empire through two separate lease agreements totaling over 1.1 million square feet. The largest of the two covers 844,311 square feet of Class A industrial space at 5690 Industrial Parkway in San Bernardino, Calif.—marking the region’s second-largest industrial lease of the year.