More Strong Absorption Needed in 1H To Normalize Industrial in Inland Empire
The Inland Empire East industrial region is standing out now in terms of demand. The area posted over 2.1 million square feet of positive absorption in Q4 2025, the most since Q1 2023, according to a new report from JLL.
This was driven primarily by large-scale build-to-suit transactions, along with other 3PL and corporate leasing velocity.
As rent spreads continue to widen between the East and West (between $0.15-$0.20 per square foot per month), many occupiers are increasingly viewing the East as a viable option where they can find value and save real dollars?even with transportation costs offset, according to Scott Coyle, a managing director at JLL.
?Given how cautious many users have been over the past year, it?s encouraging to begin seeing some positive signs of net absorption, particularly in the East,? he told GlobeSt.com.
?This, combined with very limited new construction and vacancy stabilizing around 8.2%, suggests the market is gradually re-balancing even as landlords remain under near-term pressure on pricing and concessions.?
Coyle said that the Inland Empire industrial market needs continued positive net absorption in the first half of 2026 to return to historically normalized supply/demand dynamics.
Limited construction deliveries, coupled with persistent tenant activity, lowered vacancy to 8.2% and stabilized availability at 13.5%.
Several large deals totaling more than 400,000 square feet, including renewals and new leases, highlighted leasing activity, signaling ongoing tenant demand for sizable logistics facilities.
The market appears positioned for a more balanced dynamic, with rent declines expected to moderate from recent quarterly drops as supply-demand fundamentals gradually align.
Tenant demand should persist for large, high-quality facilities, supported by ongoing third-party logistics and retailer requirements.
Speculative construction is expected to remain muted, which may temper further increases in vacancy. Elevated vacancy and competition for credit tenants, however, are expected to keep asking and effective rents under near-term pressure and sustain deal-specific incentives.
Source: GlobeSt/ALM