Inland Empire Renter Demand Strong Enough to Support Multifamily Rent Growth

While multifamily developers continue to bring new projects through the construction pipeline, elevated renter demand in the Inland Empire has offset some of the supply-side pressures. The vacancy rate ended the first quarter at 4.6%, about 80 basis points higher than the region’s five-year average. Asking rents have risen by 3.5% over the past 12 months and got off to a strong start to 2025. This growth has been driven primarily by two factors. First, a steady influx of higher-priced new units has pushed average rents higher. Second, vacancy conditions have remained low enough—and renter demand strong enough—to allow operators to raise rents despite growing competition. Absorption has supported overall market stability, with approximately 2,600 units absorbed over the past 12 months. The North Ontario submarket led the region in absorption, accounting for roughly 650 units.

Although sales activity increased during the opening months of 2025, transaction volume in the Inland Empire multifamily market remains light, with the number of transactions still 40% below the five-year average. Pricing has been steady higher in recent months despite a shift toward older property vintages. The median sale price so far this year is $310,300 per unit, up slightly compared to 2024. During the first quarter, two-thirds of transactions involved properties built in the 1980s, with the remaining sales primarily consisting of 1970s vintage assets. This marks a shift from 2024, when 1990s and 2000s properties accounted for 80% of transaction activity. The rise in values can likely be attributed to the location of the recent transactions, which have largely occurred in higher-rent submarkets such as Greater Ontario/Rancho Cucamonga. Cap rates have remained stable, staying within the low 5% range.

Looking ahead

Property performance trends recorded in recent periods are likely to continue through the end of the year, with rents projected to rise steadily and vacancy rates expected to inch higher. Completions in 2025 are forecast to be elevated for a second consecutive year, with about 4,000 units coming online. Vacancy will likely continue to inch higher, though persistent renter demand should keep any increases modest. The impact of strong absorption will be reflected in rental rates, which will continue to gain ground. Economic growth in the Inland Empire could be impacted by disruptions in international trade dynamics. Warehousing, logistics, and distribution are some of the leading employment sectors and economic drivers in the region. Any slowdown in trade from Asia through the ports of Los Angeles and Long Beach could act as a drag on key industries within the local economy. It remains too early in the cycle to make a definitive forecast regarding the impact of potential shifts in international trade policy on the region.

Activity within the Inland Empire multifamily investment market is expected to increase in 2025, although it will likely remain below historical averages. The region has maintained stable operating conditions despite elevated inventory growth over the past two years. Some investors may wait for further signs of improvement such as vacancy rates stabilizing or declining, consistent rent growth, or more favorable interest rate conditions before increasing investment activity. The large volume of new units being completed is adding competitive pressures, but also will present investment opportunities. Absorption rates are currently high and may lead to improved market conditions once construction slows. Submarkets along trade corridors from Los Angeles have posted the highest sales activity in recent years and are projected to continue this trend through 2025 and 2026, supported by stronger job sectors linked to industrial development. The Riverside/Corona submarket is expected to remain among the most active areas for investment in the region.

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