Walmart, Clarion buy IE big-box warehouses as vacancy hits 8.5%

Cushman & Wakefield IE MarketBeat: Five large warehouse sales closed in the Inland Empire in the first quarter, led by Walmart's $112M owner-user purchase of a 507,000-sf building at 1001 Columbia Ave. in Riverside from State Street Global Advisors. The price worked out to $220 psf — well above the market's $1.02 monthly NNN asking rent and a premium for vacant space in a soft market. Clarion paid the Los Angeles County Employees Retirement Association $140M for a million-square-foot building at 20901 Krameria Ave. in Riverside, or $140 psf. AEW Capital Management, MDH Partners, and Px Socal Riverside took the other three deals on the top-five list.

The transactions closed as the broader market softened. Cushman & Wakefield put overall IE industrial vacancy at 8.5% for the quarter, up 50 basis points from Q4 and more than twice the 10-year average of 4.0%. Net absorption turned sharply negative at -3.4 msf, driven by four buildings over 1 msf each going vacant in the quarter. Direct asking rents averaged $1.05 psf monthly NNN, down 6.2% from Q4 and 14.0% year-over-year. Total availability stood at 78.1 msf, with sublease space accounting for 13.7 msf.

The sales activity reads against that backdrop. Big-box product is trading even as vacancy widens and rents compress — institutional sellers like LACERA and State Street are clearing inventory, and institutional buyers and occupiers are stepping in. The Walmart deal in particular is a signal: owner-users paying $220 psf for vacant space don't usually show up in markets that look as soft as the absorption numbers suggest.

C&W also flagged a divergent submarket pattern. Inland Empire West vacancy rose 90 bps to 7.3%, and Inland Empire East rose 20 bps to 10.6%. Inland Empire South ran the other direction, with vacancy falling 120 bps to 4.1% on two move-ins above 100,000 sf at the Corona Lakeside Logistics Center. Larger occupiers, the report notes, are increasingly exploring secondary and tertiary markets outside the IE to manage costs and entitlement timelines.