Quarterly Report Q1 2026

Jones Palitz Industrial Team  /   May 18, 2026

The Inland Empire industrial market is clearly in a cooling phase after a long stretch of rapid expansion. Vacancy is rising across the region, and a big part of that shift is coming from tenants giving space back rather than new construction flooding the market. Several very large buildings have gone empty at the same time, which has amplified the overall impact and made the slowdown feel more pronounced. Instead of aggressive growth, the market now feels like it is resetting and finding a more balanced footing after the highs of the past few years.

Leasing activity is still happening at a healthy pace, which shows there is still demand in the market, but the nature of that demand has changed. Many companies are being more cautious, often downsizing, consolidating, or taking time before making long-term commitments. Even though deals are getting done, they are not enough to fully offset the amount of space being returned. This dynamic is shifting leverage toward tenants, giving them more negotiating power, more options, and generally better deal terms than they have had in recent years.

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