Inland Empire Commercial Construction Report – April 2026

The Inland Empire commercial construction and land development market enters the spring of 2026 at a defining inflection point. Industrial development has meaningfully decelerated from its historic highs, tariff-driven cost pressures are reshaping project underwriting across every asset class, and yet new leasing velocity, landmark land deals, and disciplined pipeline management are collectively signaling that the region’s long-term fundamentals remain intact.

The market spanning Riverside and San Bernardino counties still commands unrivaled national attention as the country’s premier distribution hub, and the data coming out of the first quarter of 2026 confirms both the challenges and the opportunities that executives, owners, and contractors must navigate with precision.

Industrial Sector: New Construction Restarts After a Quiet Quarter

The most consequential headline for contractors and developers is the return of industrial groundbreakings. According to CBRE’s Inland Empire Industrial Figures for the first quarter of 2026, 854,000 square feet of new industrial development broke ground across the Inland Empire, a significant rebound following a prior quarter in which zero new projects commenced.

That figure is modest by historical standards, but directionally important. During the peak of the cycle in 2022, the region carried more than 33 million square feet of industrial space under construction at a single point in time, a figure that has compressed dramatically as developers right-sized their pipelines in response to rising vacancy and softening rent growth.

New leasing activity has been the bright spot supporting that restart. CBRE reported 13.6 million square feet of new industrial deals signed during the first quarter of 2026, a 40.2 percent increase from the 9.7 million square feet leased in the fourth quarter of 2025, and 15.3 percent above the 11.8 million square feet signed during the same period a year prior.

Asking lease rates in the Inland Empire Core averaged 1 dollar and 9 cents per square foot, triple net, per month in the first quarter of 2026, while taking lease rates rose to 1 dollar and 8 cents per square foot, triple net per month, a 4.9 percent increase quarter over quarter. Those numbers matter for contractor and developer underwriting because rising effective rents support the viability of new speculative construction even in a compressed-margin environment.

Vacancy: The Overhang Continues But Shows Early Signs of Stabilization

The vacancy picture remains a central challenge. The Inland Empire Core recorded a 7.8 percent industrial vacancy rate in the first quarter of 2026, a 70 basis point increase driven primarily by significant move-outs among buildings 500,000 square feet and above. Net absorption was negative 4.7 million square feet for the quarter.

To contextualize that figure, vacancy in the Inland Empire Core was virtually nonexistent in early 2022, sitting near 0.6 percent. The normalization now underway reflects years of record-breaking speculative supply finally meeting a market where tenant demand has moderated from pandemic-era highs.

Importantly, the development pipeline has thinned to its lowest level in over a decade. Construction starts had moderated to approximately 13 million square feet in 2024, down from a cyclical peak of 34 million square feet, and could potentially fall below 5 million square feet in deliveries for 2026. For developers and contractors who survive this period of recalibration, a leaner pipeline means future projects face far less competitive pressure from new supply once absorption catches up.

A separate industry analysis by Kidder Mathews confirms that average industrial rents have stabilized at approximately 1 dollar per square foot triple net and that the market is expected to begin steadily improving in 2026 as new construction completions remain below historical norms.

The Goodman Logistics Campus: A Bellwether for Inland Empire West

One of the most significant active leasing announcements of early May 2026 came from Goodman Group, which launched leasing at the Goodman Logistics Center in Rancho Cucamonga, described as the largest contiguous logistics campus currently available in the Inland Empire West. The 1.6 million square foot campus represents exactly the type of first-generation, Class A product that tenants are targeting in a flight-to-quality environment.

Contractors and developers watching the Rancho Cucamonga corridor should view this as a leading indicator. When a project of that scale activates its leasing campaign in a softening market, it signals developer confidence that institutional-grade demand will absorb quality product faster than the broader vacancy data might suggest.

The Ellis Avenue Logistics Center in Perris: Ground Up Construction Underway

Newcastle Partners is developing the Ellis Avenue Logistics Center in Perris, a 631,011 square foot Class A industrial facility in Riverside County. JLL Capital Markets arranged 65.1 million dollars in senior construction financing for the project in early 2026, with completion and stabilization projected for late 2026.

This transaction is a textbook example of how well-capitalized sponsors are still moving forward on select ground-up projects despite the broader slowdown. Riverside County submarkets like Perris continue to attract institutional construction lending because of their strategic access to Interstate 215 and the broader Southern California logistics corridor.

The Apple Valley One Million Square Foot Distribution Center: San Bernardino County’s Northern Expansion

In San Bernardino County, Uncommon Developers of Los Angeles completed entitlement for the Apple Valley One Million Distribution Center, a 1.1 million square foot facility representing the first phase of a 550-acre master-planned development. DAUM Commercial Real Estate Services was retained to handle leasing for the project, with executive vice presidents Rick John and Dan Foye leading the effort.

The Apple Valley development illustrates the continued northward and eastward push of industrial land development in San Bernardino County. As legacy submarkets in Ontario, Fontana, and Rialto have seen land costs rise and entitlement timelines lengthen, developers are actively unlocking sites in Victorville, Hesperia, and Apple Valley as the next frontier.

Land Development: A 1,400-Acre Site in Riverside County Enters the Market

On May 5, 2026, Cushman and Wakefield announced it is marketing a 1,400-acre residential development site centrally located within the Inland Empire in Riverside County. The site includes a tentative tract map, providing developers with a clear entitlement pathway, and is positioned within minutes of Corona, Riverside, and Menifee, placing it squarely in one of the region’s most active growth corridors.

Kevin Turner, Hector Vargas, and David Harbour of Cushman and Wakefield have been retained to market the property in partnership with WD Land Advisors. For large-scale residential developers and master-planned community builders, this is a rare land offering of this magnitude in a region where finished and entitled lots are in persistent short supply.

The Riverside County growth corridors of Menifee, Eastvale, Beaumont, Murrieta, Temecula, and Perris have accounted for the bulk of new residential construction permits in the county in recent years. A 1,400-acre entitled site within that zone represents a multi-year development opportunity for a well-capitalized buyer.

Multifamily Development: Steady Delivery Amid Occupancy Pressure

The Inland Empire multifamily construction pipeline remained active heading into the spring of 2026. Developers had 7,198 units under construction as of January 2026, with an additional 45,000 units in the planning and permitting stages, according to Yardi Matrix.

Construction deliveries for the first quarter of 2026 totaled 260 units, modestly above the 235 units completed the prior quarter, with the Ontario and Chino submarket accounting for 210 of those units. Multifamily investment sales reached 108.7 million dollars in the first quarter of 2026, and pricing per unit increased to 262,000 dollars, supported by notable institutional transactions including the acquisition of the Hawthorne, a newly built 178-unit community in Riverside.

The occupancy rate across the Inland Empire multifamily market closed the first quarter of 2026 at 95.4 percent, down 50 basis points from the second quarter of 2025, driven by the delivery of more than 3,700 units over the past year. For contractors and developers, that occupancy softening underscores the importance of site selection and submarket targeting as the delivery wave plays out through 2026.

Office Sector: The Only Single-Digit Vacancy Rate in Southern California

While office construction has not been a primary driver of activity in the Inland Empire, the sector’s fundamentals are worth tracking for mixed-use developers and contractors serving that segment. The Inland Empire office market recorded a vacancy rate of 6.1 percent in the first quarter of 2026, up 40 basis points quarter over quarter, yet it remains the only major Southern California metro with a single-digit office vacancy rate.

Asking rents proved resilient, rising 3 cents quarter over quarter to 2 dollars and 23 cents per square foot, full service gross. That relative strength suggests the Inland Empire remains a viable destination for office development activity at a scale and pricing structure that Los Angeles and Orange County markets cannot currently offer.

The Tariff Factor: What It Means for Every Project Underway

Tariffs are the single most consequential external variable shaping construction economics in the Inland Empire right now. Cushman and Wakefield estimated in April 2026 that current tariff rates will result in a 6.0 percent increase in construction materials costs relative to a 2024 baseline before the new tariff regime, and that total project costs are estimated to rise approximately 3.0 percent overall.

Construction price inputs across the national construction sector rose at a, quote, “staggering” 12.6 percent annualized rate during the first two months of 2026, driven by tariff-induced increases for products including wire, cable, industrial controls equipment, copper, and steel. California construction costs are escalating at an annual rate of 4 to 5 percent and potentially rising to 6 to 8 percent as tariffs continue to work through the supply chain.

Steel, aluminum, and copper items made entirely or mostly from those metals carry a 50 percent tariff as of April 2026. For contractors, the practical implication is that material procurement strategy, early bidding, and escalation clause negotiation are no longer optional conversations in project planning.

More than a third, specifically 36 percent, of California commercial real estate developers surveyed by Allen Matkins and the University of California Los Angeles Anderson Forecast reported delaying or canceling projects in response to increased construction costs and global trade tensions. The firms that respond to this environment with disciplined underwriting and flexible project sequencing will emerge with a significant competitive advantage over those that pause indefinitely.

A February 2026 Supreme Court ruling invalidated tariffs imposed under the International Emergency Economic Powers Act, but that ruling does not affect tariffs enacted under other statutes, including many that impact building materials. Contractors should not expect broad cuts in overall project costs as a result of that decision.

The Inland Empire’s National Standing: Still Number One

Despite the near-term headwinds, the Inland Empire’s macro competitive position has not changed. According to CBRE, the Inland Empire claimed the largest share of the nation’s top 100 industrial leases in 2025, recording 14 of those transactions totaling 11.8 million square feet and outpacing all other major logistics markets in the country, including second-ranked Chicago and third-ranked Dallas-Fort Worth.

Leasing deals in the 200,000 square foot and above size range reached approximately 79 transactions in 2025, up dramatically from a low of 20 to 25 deals in 2023, and industry professionals characterize the region as, quote, “relatively on fire” heading into 2026.

National industrial leasing in the first quarter of 2026 saw 145.2 million square feet of leases executed, with 71.6 percent of those being new leases, and net absorption of 50.9 million square feet demonstrated exceptional strength for what is historically a slower quarter.

San Bernardino and Riverside counties are home to an estimated 4,000 warehouses spanning approximately 37 square miles, the largest contiguous cluster on the planet, making this region structurally irreplaceable in global supply chain infrastructure.

What the Data Suggests

The first quarter of 2026 data paints a nuanced picture. The region is absorbing a historic wave of supply, dealing with cost inflation from tariffs, and navigating a leasing market that, while improving, has not yet fully recovered to the deal velocity of 2021 and 2022.

But the signals worth watching carefully are the restart of industrial groundbreakings after a zero-start quarter, the 40 percent surge in new leasing activity, the stabilization of taking rents, and the entry of a 1,400-acre entitled residential land site into the market at the same time that multifamily investors are still committing capital at 262,000 dollars per unit. Those are not the metrics of a market in distress. They are the metrics of a market tightening its belt and setting itself up for the next growth cycle.

The compression in the construction pipeline to near decade lows means that developers who break ground on well-located, Class A product today are building into a supply environment that will be meaningfully thinner by the time those projects deliver in late 2026 and 2027. History in this region consistently rewards those who build ahead of the cycle, not behind it.

My Closing Remarks

The Inland Empire has earned its position as the most strategically important logistics and commercial development corridor in the western United States, and nothing about the data from April 2026 changes that structural reality.

The contractors, developers, and executives operating here face a more demanding cost environment than they have in years, and that demands sharper pencils, stronger relationships with material suppliers, and more creative financing structures.

The opportunity, however, is equally real.

Entitled land is rare.

Institutional leasing demand is recovering. The pipeline is thin. And the long-term drivers of population growth, port proximity, and e-commerce fulfillment demand are not going anywhere.

The professionals who stay disciplined, stay informed, and stay active in this market will find that the spring of 2026 was not a moment to step back.

It was a moment to lean in.