Inland Empire industrial leasing strategies matter more than ever in 2026. With vacancy pushing toward 10% and tenants gaining leverage, the way you structure deals today will shape your cash flow for years. As an industrial owner in Southern California’s Inland Empire, you’re not just competing on rent—you’re competing on flexibility, concessions, and how well your space fits modern logistics and e-commerce needs.
Key Takeaways
- The Inland Empire industrial market is experiencing vacancy rates around 7–10% in 2026, creating a tenant-favorable leasing environment with increased negotiating leverage for occupiers.
- Landlords are offering significant rent concessions including free rent, tenant improvement allowances, and longer lease terms—effective rental rates are down from peak levels in several Inland Empire submarkets.
- Strategic leasing opportunities exist now as construction completions slow dramatically while port activity and absorption trends signal market stabilization in the second half of 2026.
Understanding the Current Market Dynamics
The Inland Empire industrial market has entered a transformative phase in 2026, presenting both challenges and opportunities for property owners who understand how to navigate the shifting landscape. After years of unprecedented growth, vacancy rates have climbed well above the ultra-tight conditions of the pandemic era, but this shift is creating advantages for landlords who know how to position their properties.
The inland empire industrial market is being reshaped by a combination of factors: substantial new construction deliveries from 2023–2025, slower leasing momentum as tenants grow more cautious, and macroeconomic uncertainty that includes tariff policy and shifting supply chains. Millions of square feet of new industrial properties have been delivered since 2023, and a meaningful portion of that inventory is still searching for tenants, while net absorption only recently began to turn positive again.
Inland Empire Industrial Leasing in a Shifting Market
Current Leasing Activity Trends
Leasing activity remains solid but below the peak years, as tenants take longer to make decisions and focus more on operational efficiency. The region still stands as one of the nation’s largest industrial hubs, and logistics users continue to see the inland empire as a critical extension of the port system and Southern California’s consumer base.
What is changing is the composition of demand. Industrial leasing today is less about massive expansions at any cost and more about “right-sizing” footprints. Tenants are gravitating toward functional industrial properties—especially warehouse and distribution space with good loading, clear height, and freeway access—rather than only pursuing large-format warehouses. Smaller and mid-size sf units in business park settings are often seeing steadier leasing activity than some oversupplied big-box buildings.
The Sublease Factor
Sublease space has become an important part of the inland empire industrial market story. Industrial tenants vacated more space than they absorbed at certain points in 2024–2025, and some of that excess ended up as sublease inventory. This has injected additional competition into the market, particularly for standard warehouse space.
Because sublease offerings often come at a discount and may include existing build-out or racking, they can exert downward pressure on direct lease pricing. For landlords, this means your leasing strategy has to be sharper: highlight advantages like newer construction, better loading, trailer yards, digital infrastructure, or more flexible terms that sublandlords may not be able to provide.
Rent Dynamics and Pricing Strategies for 2026
Understanding Current Rent Levels
Headline industrial rent growth has cooled from its 2020–2023 surge. Asking rent levels in the inland empire industrial market have flattened or even pulled back slightly in some submarkets, especially for larger warehouse and logistics properties. In several corridors, falling rents and rising vacancies are a reality compared with the 2023 peak.
However, the story isn’t just about face rent; it’s about effective rent. With more competition and softer demand, landlords in Southern California’s inland empire are accepting deeper concessions to get deals signed. That means the true economic value of a lease, after free rent and other incentives, may be noticeably lower than the asking rate suggests.
The Concession Landscape
Rent concessions are now a central part of inland empire industrial leasing strategies. Landlords must offer more to stand out, particularly where vacancy rate levels approach the 10% range or where there is oversupplied big-box product.
Common incentives in 2025 and into 2026 include:
- Multiple months of free rent (rent abatement) on longer-term leases.
- Tenant improvement allowances for modifications to existing warehouse or standard warehouse space.
- Stepped rent structures where the tenant starts below market and increases over the term.
- Options and flexibility that help occupiers manage credit risk and moving costs.
In some cases, rent concessions and abatement can equal several percentage points of lease value. This may feel painful in the short term, but it can be a smart strategy to maintain occupancy and cash flow while market conditions gradually improve.
Strategic Leasing Approaches for Landlord Success
Target the Right Tenant Segments
In 2026, it is essential to be intentional about which tenants you target. Logistics firms, third-party logistics providers, e-commerce occupiers, and manufacturing or light assembly users all approach space differently.
Winning strategies include:
- Understanding which tenants are still expanding despite macroeconomic uncertainty, such as certain third-party logistics users tied to resilient consumer spending.
- Recognizing that some retailers and fashion brands have pulled back, while others (like value-oriented concepts) may still be active.
- Focusing on tenants that need southern California’s inland empire for proximity to the port, major highways, and the dense Los Angeles consumer base.
Industrial leasing demand is still heavily driven by supply chains and port-related logistics. Even as some companies trim footprints or explore sublease, many occupiers still rely on California’s inland empire to serve the wider U.S. market.
Emphasize Location and Functionality
Within the inland empire, micro-location matters. Inland Empire West often commands stronger rent and lower vacancy because of better proximity to the port of Los Angeles and the broader Los Angeles Basin. Inland Empire East, while sometimes more oversupplied and facing slightly higher vacancy, can be very attractive for tenants that value cost savings and larger formats.
To stand out:
- Highlight freeway access, port drayage times, and access to labor.
- Emphasize practical features: dock doors, clear height, yard space, and trailer yards.
- If you have more specialized industrial properties (cold storage, cross-dock logistics, or high-power manufacturing), lean into that specialization instead of marketing as generic warehouse.
Tenants look for operational wins. When rent growth slows, functionality and logistics efficiency often become the deciding factors.
Flexible Lease Terms and Strategic Structuring
Macroeconomic uncertainty and tariff headlines have made many occupiers cautious. Some want shorter terms; others are willing to sign longer leases if the economics are compelling. Inland empire industrial leasing strategies must reflect this reality.
Consider:
- Offering both 3-year and 5- or 7-year options with different concession packages.
- Providing expansion or contraction rights where feasible, especially for logistics firms that manage changing volumes.
- Using options to extend so tenants can commit without feeling locked into a single long-term decision in a volatile environment.
In a 10% vacancy market, flexibility can be the difference between landing a quality tenant and watching the space sit.
Market Outlook and Positioning for Recovery
Construction Pipeline and Future Supply
One of the most important aspects of the inland empire industrial outlook is the construction pipeline. After massive deliveries in 2022 and 2023, sf under construction has come down significantly. Developers pulled back in response to higher interest rates, softer demand, and headlines about negative net absorption and rising vacancies.
This slowdown in delivery is good news for landlords:
- Less new product means less competition over the next 18–24 months.
- Existing buildings that lease now are poised to benefit when demand and rent growth strengthen again.
- Regulatory scrutiny on large-format warehouses and environmental impacts will likely keep new large-scale projects more limited.
For landlords, the message is clear: this may be the first time in 15 years that the market feels oversupplied at scale, but the construction pullback is already laying the groundwork for the next tightening cycle.
Absorption Trends and Stabilization Signals
Even with periods of negative net absorption, there are early signs that leasing momentum is stabilizing. Some logistics and e-commerce occupiers that over-expanded in 2021–2022 have completed their footprint rationalization. At the same time, new entrants and growth from third-party logistics users are helping to backfill quality space.
Key signals to watch:
- Shifts from negative to neutral, and then positive net absorption quarter over quarter.
- Decreases in large blocks of sublease sf as space is re-leased or withdrawn.
- Stabilizing effective rents in key inland empire submarkets, even if headline rent growth remains muted.
As the broader U.S. economy digests earlier inventory buildups and adjusts to new consumer spending patterns, the inland empire’s industrial base is well-positioned to benefit from renewed leasing activity.
Regional Development Patterns
Because prime infill land in southern California’s inland empire is scarce, some of the newest logistics construction has pushed into farther-flung markets: High Desert communities, parts of inland empire east, and corridors closer to Kern County. These areas can accommodate large-format warehouses that require huge land sites and parking for trailers and employees.
However, big-box leasing demand has cooled compared with the frenzy of the early 2020s. Industrial tenants vacated more space in some of these submarkets than they absorbed, leading to that widely discussed 15-year high vacancy rate around the mid- to high-single digits or slightly above.
For landlords with large buildings, inland empire industrial leasing strategies should:
- Focus on creditworthy, operationally sophisticated tenants.
- Be realistic on rent and concessions in oversupplied pockets.
- Consider creative uses such as partial sublease, trailer yards, or flex/creative industrial where zoning and design allow.
Optimizing Your Property for Competitive Advantage
Property Improvements and Tenant-Ready Space
In today’s market conditions, simply putting a lease sign on the building is not enough. Landlords must offer more than just four walls and a roof. The goal is to present tenant-specific solutions that help occupiers operate efficiently from day one.
Consider:
- Improving loading, circulation, and trailer yards for logistics firms.
- Upgrading lighting, sprinklers, and power to meet modern expectations.
- Investing in digital infrastructure that supports automation, robotics, and advanced inventory systems.
- Delivering clean, functional, “move-in ready” space that reduces a tenant’s moving costs and downtime.
When a prospect compares your building to another that needs substantial work, the ready-to-go building frequently wins—even if the asking rent is slightly higher.
Marketing and Positioning Strategies
Your marketing needs to reflect both the realities of 2026 and the strengths of your asset. In a softer leasing environment, clarity and honesty matter. Promote what your property does best, and don’t oversell features that are not competitive.
Strong positioning might include:
- “Port-proximate logistics solution” for western inland empire locations.
- “Cost-effective distribution hub” for inland empire east sites with aggressive rent and concessions.
- “Scalable industrial solution” for business park space that can handle growth within the park.
Remember that logistics and industrial decision-makers think in terms of total occupancy cost, labor availability, and operational efficiency. If you demonstrate how your building solves those problems, you’re already ahead.
Working with Experienced Representation
In this kind of market, experience really counts. A seasoned commercial real estate advisor who knows the inland empire industrial market report data, current lease comps, and what landlords must offer to win deals can help you avoid costly missteps.
My work at Tolj Commercial is all about that kind of strategic guidance. With over 18 years in commercial real estate, representing both business owners and landlords, I’ve seen multiple cycles—including high-growth periods and times when rent concessions and creative deal-making were essential. That background allows me to move quickly, negotiate effectively, and keep your long-term goals in focus.
Positioning for 2026 Success
The Inland Empire industrial outlook in a 10% vacancy market is not about doom and gloom—it’s about strategy. Yes, rising vacancies and softer demand have pushed the market into a more occupier-favorable phase. But the same fundamentals that made southern California’s inland empire the nation’s largest industrial market are still in place: proximity to the port, access to one of the largest consumer bases in the U.S., and deeply embedded logistics infrastructure.
In this environment:
- Flexibility is your friend, especially in lease structuring and concessions.
- Quality, functionality, and location still separate the winners from the rest.
- Acting now, while the market is less crowded with new construction, can set you up for stronger rent growth and occupancy when conditions tighten again.
Owners who lean into market dynamics rather than fight them will be best positioned when rent growth resumes and vacancy rate levels retreat from their current highs.
FAQs
What is the current vacancy rate in the Inland Empire industrial market?
Vacancy in the inland empire industrial market has climbed into the high-single digits, approaching roughly 10% in some submarkets. This is a major change from the sub-4% vacancy environment seen earlier in the decade and is the highest level in many years. It reflects both heavy deliveries of new sf and a pullback in leasing demand.
How much are industrial rents in the Inland Empire in 2026?
Industrial leasing rates have eased off their 2023 peak. While asking rents remain relatively high by historical standards, effective rents have softened due to rent concessions and longer free rent periods. Larger logistics and warehouse spaces often see the most aggressive pricing pressure, while well-located smaller units can still command strong rent.
What concessions are landlords offering in the current market?
Landlords in southern California’s inland empire are commonly offering free rent, tenant improvement allowances, and flexible lease terms. In some cases, rent abatement can total several months on a multi-year lease. These incentives are meant to compete with sublease offerings, offset moving costs, and encourage tenants to commit even amid macroeconomic uncertainty.
When will the Inland Empire industrial market recover?
The outlook suggests that 2026 is a transition year. As construction slows and less new sf enters the market, the oversupply begins to work itself out. Assuming no major economic shock, leasing momentum should gradually improve and vacancy could start trending lower in the late 2026 to 2027 period, especially if port volumes and consumer spending remain stable.
What types of industrial properties are leasing fastest?
Functional, well-located warehouse space with good loading and access to major highways typically leases faster than older, less efficient buildings. Standard warehouse space that has been thoughtfully upgraded, as well as business park units serving local and regional occupiers, often see steadier demand than some large-format warehouses in oversupplied pockets.
Conclusion
The inland empire industrial market in 2026 rewards owners who are proactive, flexible, and data-driven. If you own warehouse or industrial properties and want a clear, strategic plan for leasing in a 10% vacancy market, I’d be glad to help.
Let’s talk through your building, your rent goals, and the realities of tenant demand today. Schedule a consult with Tolj Commercial, and together we’ll craft an inland empire industrial leasing strategy that makes sense right now—and sets you up for the next upswing.
