Riverside’s commercial real estate market reflects the broader dynamism of Southern California—a unique blend of suburban expansion, urban revitalization, and evolving economic drivers. As one of the region’s fastest-growing cities, Riverside offers a range of opportunities across retail, office, industrial, and mixed-use spaces. However, navigating this market requires a clear understanding of local trends, zoning regulations, and shifting tenant demands. If you’re exploring commercial properties in the Riverside area, here are several key factors to keep in mind:

  1. Market Dynamics: Southern California offers diverse property types, from retail centers in Los Angeles to industrial zones in the Inland Empire. The region’s real estate market is changing, with transactions influenced by local legislation, economic trends, and shifts in consumer behavior.
  2. Real Estate Trends: In 2023, the market faced high interest rates and inflationary pressures, impacting deal flows. However, the outlook for 2024 is optimistic, with stabilized interest rates and increased deal activity expected.
  3. Navigating the Shift: There’s growing interest in converting underused office and retail spaces into housing to meet residential demand, presenting opportunities for innovative investors.

I’m Matt Morgan, a seasoned professional in the Southern California commercial real estate industry. Since 2008, I have steered this diverse market, specializing in retail and office properties. With a commitment to personalized service, I help clients achieve their investment goals.

 

Understanding the Riverside, California Commercial Real Estate Market

Southern California’s commercial real estate market is a complex landscape shaped by interest rates, inflationary pressures, and a recessionary cycle that has recently influenced transactions and investment strategies. Let’s break down these factors and how they impact the market:

Interest Rates

In 2023, rising interest rates posed significant challenges for both buyers and sellers, making it more difficult to secure financing and close deals. Higher borrowing costs led to a slowdown in transaction volume, as parties often struggled to align on pricing and terms. As we progressed through 2024, however, interest rates began to stabilize, bringing a measure of predictability back to the market. Looking ahead into 2025, this renewed stability is expected to support increased investor confidence, potentially leading to a rebound in deal activity and a more dynamic investment environment.

Inflationary Pressures

Inflation continues to influence the commercial real estate landscape in Riverside, as it has across Southern California. Rising costs for materials, labor, and services have increased the expenses associated with property development, maintenance, and operations. These pressures often translate to higher rents, which may benefit property owners but can present challenges for tenants managing tighter budgets. Nevertheless, Riverside’s market fundamentals remain solid. Demand for quality commercial space—particularly in well-located retail, industrial, and mixed-use sectors—continues to hold strong, driven by the city’s growing population and strategic position within the Inland Empire.

Main Types of Commercial Properties

When exploring commercial real estate in Riverside, California, understand the different types of properties available. Each type comes with its unique set of opportunities and challenges. Let’s explore the four main categories: multi-family buildings, retail centers, office buildings, and industrial properties.

Multi-Family Buildings

Multi-family properties continue to be a vital component of the Riverside, California real estate market. As the city experiences steady population growth and increasing demand for housing, these assets often offer consistent cash flow and long-term value. In line with broader Southern California trends, Riverside is also seeing increased interest in converting underutilized commercial spaces into residential units. This adaptive reuse not only helps alleviate the region’s housing shortage but also contributes to the revitalization of older commercial corridors, supporting both urban renewal and sustainable development.

Retail Centers

Retail centers in Riverside, California are undergoing a notable transformation in response to shifting consumer preferences and lifestyle trends. Traditional retail spaces are being reimagined, with many developers opting to convert aging or underperforming shopping centers into mixed-use developments that blend retail, residential, dining, and entertainment components. This approach not only enhances property value but also fosters vibrant, community-oriented environments. In Riverside’s growing urban core and surrounding neighborhoods, these redevelopments are helping to activate underutilized spaces while meeting the needs of a more dynamic and experience-driven population.

Office Buildings

The office building sector is facing unique challenges and opportunities. With the rise of remote and hybrid work models, there is a growing interest in converting office spaces into residential or hotel uses. However, as noted in recent discussions, such conversions can be complex due to differing building code requirements. Despite these challenges, the adaptive reuse of office buildings remains a promising avenue for investors looking to maximize the value of their assets.

Industrial Properties

Industrial properties in Riverside are seeing significant demand, fueled by the surge in e-commerce and the expanding logistics sector. Riverside’s strategic location within the Inland Empire, combined with its proximity to major Southern California ports, makes it an ideal hub for logistics and distribution centers. With the continued growth of online shopping and supply chain needs, demand for industrial spaces is expected to remain strong, presenting a promising investment opportunity. As rents for logistics real estate continue to rise, these properties offer substantial income potential for investors.

Understanding the dynamics of Riverside’s industrial real estate market, along with broader trends in the region, is crucial for navigating the commercial real estate landscape effectively. Each property type—whether industrial, retail, office, or mixed-use—provides unique investment opportunities, and staying informed on local trends and forecasts can help guide your decision-making.

 

Navigating the acquisition and leasing process in Riverside’s commercial real estate market can be intricate, but with a strategic approach, it becomes more manageable. As the city continues to grow and evolve, understanding the local market dynamics, zoning regulations, and tenant demands is key. Here’s how to effectively navigate the process and maximize your opportunities:

Acquisition

Acquiring commercial real estate involves several key steps: identifying potential properties, conducting thorough due diligence, and negotiating purchase terms. In Southern California, properties like industrial spaces are particularly sought after due to the region’s strategic location near major ports. As noted by experts, this area is a hotbed for logistics and distribution centers, making it an attractive option for investors looking to tap into the booming e-commerce sector.

Tip: Evaluate the property’s potential for appreciation and income generation. Consider factors like location, current market trends, and future growth prospects.

Leasing

Leasing commercial properties requires understanding market dynamics and tenant needs. Southern California’s leasing market is diverse, with options ranging from retail centers to office buildings. The recent cooling of logistics real estate rents in the area offers a unique opportunity for businesses to secure space at competitive rates.

Tip: Stay informed about local rent trends to negotiate favorable lease terms. This can help you secure a property that meets your business needs without overextending your budget.

Consulting

Engaging with a knowledgeable real estate consultant can provide valuable insights into the acquisition and leasing process. Consultants offer expertise in market analysis, property valuation, and negotiation strategies. They can help you identify properties that align with your investment goals and guide you through the complexities of the transaction.

Tip: Consultants can also provide advisory services on property conversion opportunities. As seen in the trend of converting office buildings to residential spaces, understanding these opportunities can significantly improve the value of your investment.

Advisory

Real estate advisory services are crucial for making informed decisions. Advisors can assist in evaluating the financial viability of a property, assessing risks, and developing a strategic investment plan. They also offer guidance on compliance with local regulations and zoning laws, which is essential for any successful real estate venture in Southern California.

Tip: Leverage advisory services to explore innovative property use options. For instance, the conversion of underused commercial spaces into housing can address local housing shortages and increase property value.

As we look ahead to 2025, several key trends are shaping the Riverside, California commercial real estate landscape. From the continued rise in logistics real estate rents driven by e-commerce growth, to the increasing conversion of underutilized commercial properties into mixed-use developments and housing, these trends are setting the stage for the city’s evolving market. As Riverside’s population grows and the demand for flexible, multi-use spaces intensifies, these factors provide valuable insights into the direction the market is heading.

Logistics Real Estate Rents

In recent years, Southern California has been a pivotal region for logistics and industrial real estate, largely due to its proximity to major ports like the Port of Los Angeles and the Port of Long Beach. However, the logistics real estate market in Southern California experienced a cooling in 2023, with rents decreasing by 5.3% according to the Prologis Logistics Rent Index. This dip in rent offers a strategic opening for businesses looking to expand or establish a presence in the area.

The decrease in rents is partly due to an increase in vacancy rates, as reported by Prologis, which suggests that more spaces are becoming available. This is an ideal time for companies to secure modern logistics spaces at more competitive rates, especially those that need to be close to major consumer markets and supply chain nodes.

Conversion of Commercial Properties to Housing

The trend of converting commercial properties into residential spaces is gaining traction, particularly in areas with high demand for housing. This is especially relevant in Southern California, where the housing crisis persists despite ongoing development efforts. The conversion of underused office buildings and retail centers into housing units can help address the housing shortage while also providing new revenue streams for property owners.

For investors and developers, understanding the potential of such conversions can open up new opportunities. Engaging with real estate consultants who specialize in these changes can provide valuable insights and help steer the regulatory landscape involved in such projects.

 

Frequently Asked Questions about Southern California Commercial Real Estate

The Riverside commercial real estate market is being shaped by several key trends. Rising interest rates and inflationary pressures have been major factors influencing the landscape in recent years. In 2023, these economic challenges made it difficult for buyers and sellers to reach agreement on terms, leading to a slowdown in deal flow. However, as interest rates begin to stabilize into 2025, many experts predict a rebound in market activity, with increased investor confidence and renewed transaction volume in both commercial and mixed-use developments.

A notable trend is the shift in the logistics sector. After a period of high demand, logistics real estate rents in Southern California fell by 5.3% in 2023. This presents a unique opportunity for businesses to secure logistics and warehouse spaces at more competitive rates.

 

Why Choose IPA Commercial Real Estate?

Our team offers a wide range of value-added consulting services designed to provide insight and guidance at every step of your real estate journey. Whether you’re looking to acquire, lease, or convert properties, we bring extensive knowledge and a hands-on approach to help you make informed decisions.

With our deep roots in Southern California, particularly in the Inland Empire, we have a finger on the pulse of local market dynamics. Our clients benefit from our ability to quickly adapt to changes, identify emerging opportunities, and mitigate risks.

Choosing IPA means choosing a partner dedicated to your success. Let us help you find the potential of Southern California’s commercial real estate market, and together, we can achieve your real estate goals.