Demand for industrial space in the Inland Empire ticked upward 20 basis points to 2.9% in the second quarter of 2023, according to Kidder Mathews. This quarterly increase is considerably smaller than the 120-bp jump experienced between Q4 2022 and Q1 of this year.
Softening demand has been attributed to reduced consumer spending and prolonged wait times at ports due to labor contract conflicts on West Coast ports in June, which caused some shippers to offload goods at East Coast ports instead. Despite a decrease in deal flow this year, several significant transactions have boosted volume overall.
Kidder Mathews predicts that vacancy rates will continue increasing through 2023 as released construction projects come into completion before declining again as new supply is absorbed and development slows down back towards typical levels. Supply growth will also push up vacancy rates until the end of the year due pre-leasing occurring at a slower rate than expected
