Industrial Insights - Sublease Market Update
Sublease Market Still Has Wood to Chop
22.2 million square feet of industrial sublease space sits available across Southern California's five counties. Analysis of 81 properties with over 100,000 SF listings reveals critical market dynamics.
The Four Things That Matter
Inland Empire Dominance
Riverside and San Bernardino counties contain 74% of available sublease space at $1.01/SF, compared to $1.28/SF in LA/Orange County. Riverside alone has more sublease inventory than LA, Orange, and Ventura combined.
Large Blocks Move Slowly
40% of listings exceed 300,000 SF, yet only 16 of 22 completed deals last year were under 250,000 SF. With annual absorption at 4.6 million SF against 22.2 million available, clearing this inventory requires approximately five years without significant rent concessions.
Modern Specifications Available
54% of subleases feature clearance heights exceeding 32 feet, providing tenants seeking vertical storage and fulfillment operations "more options than they've had in years." This modern-spec product enters the market at below-market rates, establishing new pricing benchmarks for direct landlord negotiations.
Accelerating Transaction Velocity
Seven of the last 22 deals closed within five months. Motivated sublessors paying rent on unneeded space demonstrate increasing urgency in deal terms, suggesting faster clearance when demand strengthens.
Bottom Line: 22.2 million SF of sublease availability represents a critical market consideration for tenants timing decisions and landlords planning retention strategies.