Inland Empire Industrial Watch
Port volumes, market fundamentals, the macro picture, and the regulatory load — read for what it does to industrial tenants and owners across San Bernardino and Riverside Counties. Updated every Friday.
The air-quality rule that quietly adds a third of a dollar per foot to your occupancy cost
South Coast AQMD's warehouse indirect source rule is now in full effect across every size phase, and most tenants still treat it as a compliance chore rather than a rent line. It is a rent line. Here is the arithmetic, and where it lands in a lease negotiation.
Rule 2305 covers warehouses over 100,000 square feet, with the point-earning obligation attaching to operators using at least 50,000 square feet for warehousing activity. Every year the operator counts truck trips, converts them to weighted trips, and owes WAIRE points against that total:
WPCO = WATTs × 0.0025 × annual variable
The 2.5 multiplier is the part that bites. A building served by tractor-trailers carries two and a half times the obligation of the same trip count in straight trucks — which describes essentially every big-box distribution tenant in the Inland Empire. Points are earned by acquiring zero- or near-emission trucks, installing chargers or hydrogen fueling, or drawing clean-truck visits. Operators who cannot or will not do any of that pay a mitigation fee of $1,000 per point, plus a 6.25% administrative fee.
One April 2026 update worth knowing: CARB-certified near-zero trucks meeting the 0.02 g/hp-hr standard now qualify on the WAIRE menu, which widens the compliance path for fleets not ready to go fully electric.
Rule 2305 obligations follow the operator, not the owner. In a standard NNN lease that means the tenant, but the lease language often predates the rule and says nothing. Settle three points before signing: who holds the reporting obligation, who funds charging infrastructure if the building needs it, and whether mitigation fees are a recoverable operating expense. A tenant who negotiates charger installation into the TI package converts an annual fee into landlord capital.
300,000 SF distribution building
Assumption, not a survey figure: 60 tractor-trailer trips per operating day, 300 operating days. Substitute your own gate counts.
Against the Q2 2026 IE West average of $1.038/SF NNN for 100,000 SF-plus space. Earning points instead of paying the fee is usually cheaper — that is the point of the rule — but the fee sets the ceiling on what compliance is worth.
Container volume, San Pedro Bay
Monthly TEUs, both ports · Jul 2024 – Jul 2026Long Beach called it the second-busiest July on record, and it still printed down 1.7% year over year. Volume was pulled forward ahead of the new Section 301 duties that took effect July 24. Expect August and September to give some of it back.
West vs. East
July 2026| Metric | IE West | IE East |
|---|---|---|
| Base inventory | 374.9M SF | 326.1M SF |
| Availability | 12.65% | 13.35% |
| Vacancy | 5.25% | 6.71% |
| Net absorption YTD | +2,157,860 | −1,041,189 |
| Leasing activity YTD | 29.9M SF | 30.1M SF |
| Transactions | 355 | 232 |
| Under construction | 5.29M SF | 3.56M SF |
| Avg NNN, 100K+ (Q2) | $1.038 | $0.889 |
East is absorbing negative on nearly the same leasing volume as West across 123 fewer deals — bigger boxes, more churn, weaker retention. West holds the pricing power at a 17% rate premium.
Regulatory and tax load on IE industrial tenants
In force · phasing · watchAB 98 / SB 415 warehouse standards
South Coast AQMD Rule 2305 (WAIRE)
Tariff regime after the IEEPA ruling
Cap-and-invest tightening
Local moratoria and mitigation fees
Macro backdrop
Q2 2026 actuals and current bank forecasts- GDP grew 1.5% in Q2, below the 1.8% expected and down from 2.1% in Q1. Consumer spending carried it at a 3.2% annual clip; business investment ex-housing rose 8.4% on AI buildout.
- Inflation is still running hot. Headline PCE +3.7% year over year, core +3.3%, both well above the Fed's target, with energy disruption from the Iran conflict feeding through.
- Labor is tighter than the growth rate suggests. Private payrolls averaged 88,000 a month in the first half, roughly three times last year's pace; initial claims hit 187,000 in July, the lowest since 1969.
- Wells Fargo reversed course in August, raising its inflation forecast and now expecting a quarter-point Fed hike before year-end, citing tariffs, elevated oil, and AI data-center power demand.
- Bank of America has been the softer read, projecting core PCE near 3.1% through Q3 and 2.8% by Q4, easing toward 2.4–2.6% in 2027 — a path that supports cuts rather than hikes.
- CoStar expects national industrial vacancy to peak this year, with rent growth projections unchanged through 2026.
Two of the largest research shops are pointed in opposite directions on the Fed. For owners weighing a 2027 refinance and tenants weighing renewal against relocation, that spread is worth more than either forecast on its own.
Port volumes in context
Calendar year| Period | POLA | POLB | Combined |
|---|---|---|---|
| 2024 full year | 10,297,352 | ~9.6M* | — |
| 2025 full year | 10,239,318 | 9,881,597 | 20,120,915 |
| 2026 YTD (Jan–Jul) | 6,083,067 | 5,758,086 | 11,841,153 |
| 2025 same period | 5,975,649 | 5,690,863 | 11,666,512 |
| Change | +1.8% | +1.2% | +1.5% |
*Long Beach's 2024 was a then-record 9.6M TEUs, up 20.3% on 2023. 2025 broke that record again.
Loaded imports, not total TEUs, are what convert into pallet positions in Fontana and Perris. Empties are roughly 37% of the combined count, and repositioning them tells you nothing about occupancy demand.
Regulatory deep-dive
One rule at a time, costed out. This week: Rule 2305 and WAIRE.
Submarket spotlight
One city or corridor: available product, recent deals, rate direction, entitlement climate.
Lease economics
Renewal against relocation, TI and free rent, what concessions are actually clearing.
Trade & supply chain
Tariffs, port volumes, inventory strategy, and what they mean for square footage.
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