Supply finally is exceeding demand in the nation's hottest industrial market in a big way: net absorption in the Inland Empire registered a shift of nearly 6M SF in the second quarter from the positive side of the ledger to the negative.

Net absorption dropped to negative 2.3M SF in Q2 2023 in the Inland Empire from a first quarter level of 3.5M SF, according to a new report from Kidder Mathews. According to the firm, this is the first negative quarterly absorption total for Inland Empire in more than 10 years.

A confluence of decreasing demand, higher delivery costs and interruptions at West Coast ports appears to have taken the steam out of the market that encompasses Riverside and San Bernardino counties in Southern California, stretching from the Los Angeles city limits to the Arizona border.