Southern California's industrial market is experiencing significant vacancy with rates reaching 5.1% after a long period of occupancy near 1%. This marks the 11th quarter of rising vacancies influenced by rising interest rates, reduced e-commerce deliveries, and declining industrial investments. While new supply diminished towards the end of 2023, the overall availability surged to a 12-year high of 7.9%. Average rents dropped by 17% to $1.32 per square foot, and net absorption showed signs of improvement, though still negative. The economic landscape continues to evolve with contrasting trends in different Inland Empire areas.
The industrial slump in Southern California, the nation's largest industrial market, has seen vacancy rates rise to 5.1 percent after previously maintaining rates below 1 percent.
Higher interest rates, fewer e-commerce deliveries, and diminishing industrial investments have contributed to a steady increase in vacancy rates over the past three years.
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