Inland Empire Commercial Office Space for Rent

Q4 2025

Inland Empire Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Inland Empire commercial real estate (CRE) market is navigating a significant period of adjustment as it closes 2025 [1]. The region, traditionally a logistics powerhouse, is seeing Industrial vacancy rise to decade highs as a massive wave of supply outpaces cooling demand [2, 7]. Office fundamentals remain surprisingly stable with low vacancy, though rents are softening [4, 5]. Retail is facing headwinds with rising availability and negative year-to-date absorption, while Multifamily shows resilience with stabilized vacancy and renewed investment interest despite a large construction pipeline [6, 9, 13].

TenantBase Proprietary Data [16] highlights the distribution of active tenant demand over the last 90 days:

  • Retail/Storefront led market activity with 45.04% of all searches [16].
  • Warehouse was the second most active sector at 44.78% [16].
  • Office accounted for 10.18% of total search volume [16].

Office Market

Market Overview The Inland Empire office market maintained stability in late 2025, contrasting with national trends, though leasing activity has slowed significantly [4, 5].

  • Vacancy & Availability: The vacancy rate dropped slightly to 5.2%, decreasing 70 basis points year-over-year [4]. Availability remains constrained due to a lack of new speculative construction [5].
  • Net Absorption: Absorption was largely flat, recording a slight negative of (12,500) SF in Q3 2025, as move-outs balanced with limited new leasing [5].
  • Rental Rates: Average asking rents dipped to $2.01 - $2.17 per SF (Full Service Gross), reflecting a nearly 2% decrease as lower-priced Class B space entered the market [4, 5].
  • Construction: The pipeline has contracted sharply, with space under construction down roughly 15% year-over-year, helping to prevent an oversupply scenario [4].

TenantBase Activity [16]

  • Demand Share: Office accounted for 10.18% of total search volume [16].
  • Lease Term Preference: Demand is predominantly for short-term flexibility [16]:
    • Less than one year: 47.22% of deals [16].
    • 2-3 Years: 36.11% of deals [16].
    • 3-5 Years: 16.67% of deals [16].
  • Size Requirements: The average lower SF required for a Less than one year term is 743 SF, compared to 1,125 SF for a 3-5 Years term [16].

Industrial & Warehouse Market

Market Overview The Inland Empire industrial market is in a "cooling phase," with vacancy rates hitting their highest level in over a decade as record construction deliveries outpace net absorption [2, 3].

  • Vacancy & Rent: Vacancy climbed to 8.4%, a sharp increase from previous years [2, 3]. Consequently, asking rents have adjusted downward to approximately $1.01 per SF NNN, a 14.4% decline year-over-year [1].
  • Demand & Supply: Net absorption turned negative, totaling -1.4 million SF to -2.6 million SF in Q3 2025 [2, 7]. This was driven by a lag in backfilling space vacated by major tenants [7].
  • Construction: Developers delivered 3.4 million SF in Q3 alone, but the pipeline is shrinking, with starts slowing significantly to manage the supply-demand imbalance [2].
  • Investment: Sales volume reached $310 million, with pricing averaging $266 per SF—a 15% pullback from 2022 peaks [2].

TenantBase Activity [16]

  • Demand Share: Warehouse accounted for 44.78% of total search volume [16].
  • Lease Term Preference: Demand is focused on short-to-mid-term options [16]:
    • 1-2 Years: 35.29% of deals [16].
    • 3-5 Years: 29.41% of deals [16].
    • Less than one year: 15.29% of deals [16].
  • Size Requirements: The average lower SF required for a 3-5 Years term is 4,667 SF, while the 5+ Years term average requirement jumps to 8,850 SF [16].

Retail Market

Market Overview Retail in the Inland Empire is seeing mixed results, with rising vacancy and softening rents despite long-term demographic tailwinds [8, 9].

  • Vacancy & Availability: The retail vacancy rate increased to 6.4% - 7.0%, driven by a surge in new supply delivered during the quarter [8, 9].
  • Net Absorption: Year-to-date net absorption remains negative at roughly -431,883 SF, although Q3 showed a modest positive turn of 16,000 SF [8, 9].
  • Rental Rates: Average asking rents fell to $1.72 per SF, a 3.3% decrease year-over-year [8].
  • Construction: Deliveries surged to 1.1 million SF year-to-date, a 37% increase from the prior year, adding pressure to occupancy rates [8].

TenantBase Activity [16]

  • Demand Share: Retail/Storefront activity dominated with 45.04% of all search volume [16].
  • Lease Term Preference: Retail tenants show a preference for stability [16]:
    • 3-5 Years: 32.89% of deals [16].
    • 1-2 Years: 22.37% of deals [16].
    • 5+ Years: 21.05% of deals [16].
  • Top Locations: Tenant interest is highest in key logistics and population hubs (deal counts) [16]:
    • Riverside: 31 [16].
    • Ontario: 19 [16].
    • Corona: 12 [16].

Multifamily Market

Market Overview The multifamily sector is stabilizing, with sales volume rebounding and the construction pipeline contracting, setting the stage for tighter conditions ahead [11, 13].

  • Vacancy & Occupancy: The vacancy rate decreased slightly to 5.6% - 5.7% in Q3 2025 [11, 13]. Occupancy closed the quarter at 95.8%, despite pressure from new luxury supply [12].
  • Rents: Average rents held steady or rose slightly to $1,942 - $2,316 per month, depending on asset class [11, 12]. Rent growth has moderated to roughly 1% annually [11].
  • Construction: The pipeline has contracted sharply, with units under construction falling 42% year-over-year to roughly 4,500 units [11, 13].
  • Investment: Sales volume surged to $395 million in Q3 2025, more than doubling the previous quarter's total, as investors returned to the market [12].

2026 Outlook

Looking ahead to 2026, the Inland Empire market is expected to rebalance as the supply wave subsides.

  • Industrial Rebound: Vacancy is projected to peak in mid-2026 before declining, as the construction pipeline empties and demand catches up [3, 7].
  • Multifamily Tightening: The steep decline in new construction starts will lead to tighter vacancy and accelerated rent growth by late 2026 [13].
  • Investment Recovery: Capital markets are expected to improve, with investors targeting industrial and multifamily assets in supply-constrained submarkets like Ontario and Rancho Cucamonga [12, 14].

Sources

  1. NAI Capital: Inland Empire Industrial Market Outlook Q3 2025
  2. Matthews: Inland Empire Industrial Market Report Q3 2025
  3. Savills: Inland Empire Q3 2025 Industrial Market Report
  4. Kidder Mathews: Inland Empire Office Market Report Q3 2025
  5. CBRE: Inland Empire Office Figures Q3 2025
  6. Riverside County Office of Economic Development: Retail Market 2025
  7. Kidder Mathews: Inland Empire Industrial Market Report Q3 2025
  8. Kidder Mathews: Inland Empire Retail Market Report Q3 2025
  9. CBRE: Inland Empire Retail Figures Q3 2025
  10. Savills US: Inland Empire Q3 2025 Industrial Market Report
  11. Kidder Mathews: Inland Empire Multifamily Market Report Q3 2025
  12. CBRE: Inland Empire Multifamily Figures Q3 2025
  13. NAI Capital: Inland Empire Multifamily Market Outlook Q3 2025
  14. Northmarq: Rising Multifamily Supply Creates New Opportunities for Investors
  15. Commercial Property Executive: 2026 CRE Outlook
  16. TenantBase Proprietary Market Data (Inland Empire - Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.