Inland Empire retail market report 2026: vacancy, rates, and growth corridors

The Inland Empire continues its evolution from logistics hub to retail destination. As of Q2 2026, the region's retail real estate market reflects both opportunity and complexity. Population growth in Riverside and San Bernardino counties consistently outpaces Orange County and coastal Los Angeles, drawing national retailers and regional concepts seeking lower occupancy costs and deeper customer pools. Asking rents remain 30–50% below coastal comparables, vacancy hovers in the mid-single digits in key corridors, and absorption patterns favor grocery-anchored centers and drive-thru formats. This report examines current vacancy, rental rates, tenant activity, and the corridors commanding the most landlord and tenant interest in 2026.

Vacancy and availability across Riverside and San Bernardino counties

Inland Empire retail vacancy sits at approximately 5.2% regionwide as of May 2026, slightly tighter than the 5.8% recorded in Q4 2025. San Bernardino County shows marginally higher vacancy at 5.6%, concentrated in older strip centers along Foothill Boulevard and Highland Avenue. Riverside County vacancy measures closer to 4.9%, driven by aggressive backfill activity in Temecula, Murrieta, and Corona. Availability including shadow space and upcoming lease expirations trends closer to 7%, particularly in centers anchored by shuttered grocery or big-box users awaiting redevelopment.

Grocery-anchored centers in growth submarkets—Eastvale, Menifee, Wildomar, Lake Elsinore—report vacancy below 3%. Inline spaces adjacent to Stater Bros., Cardenas, or Northgate González achieve faster lease-up than unanchored or furniture-anchored plazas. Drive-thru pad availability remains scarce; landlords with vacant outparcels in high-traffic corridors receive multiple offers within weeks of listing. Conversely, older centers along traditional retail strips lacking parking or freeway visibility struggle with double-digit vacancy, often requiring capital investment or anchor replacement to stabilize.

We continue to see tenant migration from Orange County and Los Angeles into Riverside County corridors. Service-based operators—urgent care, beauty, tutoring, pet grooming—absorb 1,200–2,500 SF spaces at rents they cannot justify in coastal markets. This migration supports overall occupancy but shifts tenant mix toward services rather than traditional retail goods.

Asking rents and deal structure: NNN and gross comparisons

Asking rents in the Inland Empire range from $1.85/SF NNN in tertiary corridors to $3.75/SF NNN in premium locations such as Victoria Gardens in Rancho Cucamonga, The Promenade in Temecula, and Dos Lagos in Corona. Median asking rent across the region sits near $2.40/SF NNN, with NNN charges adding $0.45–$0.85/SF depending on center age, amenities, and CAM structure. Gross lease equivalents therefore land in the $2.90–$4.60/SF range for typical inline space.

Newer lifestyle centers command the upper end of the range. Victoria Gardens inline spaces currently ask $3.25–$3.75/SF NNN. Temecula's French Valley corridor near the Promenade Temecula shows asking rents of $2.90–$3.40/SF NNN for end-cap or junior anchor positions. Ontario Mills Boulevard and adjacent auto-row retail average $2.50–$2.90/SF NNN. Older strip centers along University Avenue in Riverside or Baseline Street in San Bernardino often list at $1.85–$2.20/SF NNN, with landlords willing to negotiate free rent and TI allowances to secure creditworthy tenants.

Deal structures increasingly include longer free rent periods—four to six months for 1,500–3,000 SF spaces—and TI contributions of $30–$50 per square foot in second-generation space. Landlords in stabilized centers resist these concessions, but owners of value-add or repositioning properties deploy capital to attract quality tenants. Ground leases for drive-thru users remain competitive, with QSR brands paying $8,000–$15,000 per month absolute NNN for premium pads, depending on traffic counts and co-tenancy.

Tenant demand and absorption: category winners and laggards

Tenant demand in the Inland Empire breaks into three tiers. Quick-service restaurants and drive-thru concepts lead absorption, particularly chicken, burger, and Mexican fast-casual brands expanding from coastal saturation into inland growth. Starbucks, Chick-fil-A, In-N-Out, and Raising Cane's continue site acquisition, often purchasing land or signing long-term ground leases. Regional chains like Tijuana Flats, The Habit, and Del Taco backfill vacated bank branches and underperforming casual-dining boxes.

Service tenants occupy the second tier. Urgent care groups, dental practices, physical therapy clinics, tutoring centers, nail salons, and pet services absorb space in grocery-anchored centers at rents 20–35% below Orange County equivalents. These operators prioritize parking, visibility, and co-tenancy over design, making them ideal for older centers with strong anchors. Fitness concepts—Crunch, Planet Fitness, Workout Anytime—lease 8,000–15,000 SF boxes vacated by sporting goods or apparel chains.

Traditional retail goods tenants lag. Apparel, footwear, and accessories face e-commerce headwinds, limiting expansion. Dollar stores saturate many submarkets; Family Dollar and Dollar Tree slow new-store pipelines after aggressive 2023–2024 growth. Furniture and home goods remain challenged except in outlet or clearance formats. We see modest activity from off-price apparel—Ross, TJ Maxx, Burlington—but these tenants focus on redevelopment opportunities rather than new construction.

Corridor spotlight: where landlords and tenants focus in 2026

Victoria Gardens and the surrounding Rancho Cucamonga town center corridor remain the Inland Empire's highest-rent, lowest-vacancy submarket. Inline availability below 2%, asking rents above $3.25/SF NNN, and tenant waitlists for end-cap and corner spaces define the market. Retailers view Victoria Gardens as the region's flagship address, justifying investment in buildout and higher occupancy costs.

Temecula's French Valley and Old Town corridors attract tenant interest from both local and national operators. The Promenade Temecula anchors the French Valley submarket with strong co-tenancy and freeway visibility. Asking rents range $2.90–$3.40/SF NNN, and vacancy sits near 3.5%. Old Town Temecula offers unique opportunities for experiential retail and dining, with rents in the $2.40–$3.00/SF NNN range and tourism-driven foot traffic supporting weekend sales.

Corona's Dos Lagos and adjacent McKinley Street corridor benefit from affluent residential growth and proximity to Orange County commuters. Asking rents range $2.75–$3.25/SF NNN, and the tenant mix skews upscale casual dining, boutique fitness, and specialty retail. Landlords report limited turnover and strong rent collections.

Ontario's auto row and Mills Boulevard corridor serve a different tenant profile. Big-box users, furniture clearance centers, and value-oriented retail occupy spaces ranging from 5,000 to 40,000 SF at $2.20–$2.70/SF NNN. Vacancy trends higher at 6–7%, but landlords with well-maintained properties near Ontario International Airport achieve faster backfill due to daytime employment density.

• Victoria Gardens / Rancho Cucamonga: $3.25–$3.75/SF NNN, sub-2% vacancy
• Temecula (French Valley / Old Town): $2.40–$3.40/SF NNN, 3.5–4% vacancy
• Corona (Dos Lagos / McKinley): $2.75–$3.25/SF NNN, sub-3% vacancy
• Ontario (Mills / Airport area): $2.20–$2.70/SF NNN, 6–7% vacancy

Investment and landlord activity: cap rates and repositioning

Investor appetite for Inland Empire retail stabilized in early 2026 after volatility in 2024–2025. Cap rates for stabilized grocery-anchored centers range 6.25–7.00%, with premium assets in Temecula and Rancho Cucamonga trading closer to 6.00–6.50%. Value-add and repositioning opportunities command 7.50–8.50% cap rates, attracting private equity and regional operators willing to inject capital for anchor replacement or facade renovation.

Landlord capital deployment focuses on three strategies. First, anchor repositioning: replacing vacated Bed Bath & Beyond, Party City, or regional grocery chains with fitness, entertainment, or off-price tenants. Second, facade and parking improvements to compete with newer lifestyle centers. Third, outparcel development or pad splits to capture drive-thru and service tenant demand. Landlords willing to invest $1.5–$3.0 million in a 100,000 SF center see occupancy gains of 8–12 percentage points within 18 months.

We observe limited new construction outside of master-planned communities. Most landlord activity centers on adaptive reuse and tenant remixing rather than ground-up development, reflecting construction costs and cautious lender appetites.

Economic and demographic tailwinds supporting retail growth

The Inland Empire's population exceeded 4.7 million residents in 2025, with annual growth rates of 1.2–1.5% in Riverside County and 0.8–1.0% in San Bernardino County. Median household income rose to approximately $78,000 regionwide, still below Orange County's $110,000 but trending upward as remote work and housing affordability draw higher-income households inland. Employment growth in logistics, healthcare, and public education supports steady retail demand.

Housing development continues at pace. Master-planned communities in Menifee, Wildomar, Eastvale, and Jurupa Valley deliver 3,000–5,000 units annually, creating immediate retail demand for grocery, pharmacy, and service tenants. Retailers target these communities early, often signing leases or purchasing land concurrent with residential entitlements. This pre-leasing activity explains the low vacancy in newly delivered centers and the premium rents developers command.

Freeway and infrastructure improvements enhance access and reduce drive times to Orange County and Los Angeles employment centers. The ongoing I-15 and SR-91 corridor expansions support retail traffic and make Inland Empire locations more viable for employees commuting west.

Challenges and headwinds: labor, taxes, and competitive supply

Retailers operating in the Inland Empire face labor challenges distinct from coastal markets. Minimum wage in California reached $16.50 in 2026, with additional mandates for fast-food and healthcare workers. Labor availability improved compared to 2023–2024 tightness, but turnover remains elevated in QSR and entry-level retail roles. Tenants budget 15–20% higher labor costs than pre-pandemic norms, pressuring already thin margins in value-oriented concepts.

Property tax reassessments and rising NNN charges concern tenants renewing leases in centers that changed hands during the 2021–2022 investment peak. Some landlords passed through property tax increases of 25–40% following sale, shocking tenants accustomed to stable CAM and tax contributions. We counsel clients to model NNN escalation and negotiate caps where possible.

Competitive supply pressures certain corridors. Moreno Valley, Perris, and portions of San Bernardino experienced overbuilding of strip retail in 2022–2023, leading to current vacancy above 8% in select nodes. Tenants benefit from negotiating leverage, but landlords struggle with debt service and deferred maintenance.

Outlook for the second half of 2026 and tenant strategy

We expect Inland Empire retail fundamentals to remain stable through year-end 2026. Vacancy should hold in the 5.0–5.5% range regionwide, with premium corridors tightening further and tertiary locations seeing modest softness. Asking rents will likely appreciate 2–3% in high-demand submarkets, with landlords in Temecula, Corona, and Rancho Cucamonga holding firm on rate. Concessions may widen slightly in older strip centers as landlords compete for quality tenants.

Tenants considering Inland Empire expansion should prioritize grocery-anchored centers with strong co-tenancy, ample parking, and freeway visibility. Avoid centers with struggling anchors or deferred capital needs unless the landlord commits to repositioning investment in writing. Service-based tenants will continue finding favorable economics compared to Orange County, but must underwrite labor costs and customer density carefully.

Landlords should focus capital on anchor repositioning, facade refresh, and outparcel development. The flight to quality among tenants rewards well-maintained, accessible properties with modern amenities and flexible space configurations.

Parker & Associates has represented retail tenants and landlords across the Inland Empire since 1995, negotiating leases in every major corridor and submarket. Whether you are evaluating a 1,500 SF inline space in Temecula or a 30,000 SF anchor box in Ontario, we bring decades of transaction data, landlord relationships, and market intelligence to every assignment. For leasing guidance, site selection, or lease renewal strategy in Riverside or San Bernardino counties, contact our team at (949) 796-7275 or leasing@digitalre.com.