Five Months After the LA Fires: How Commercial Real Estate is Rebuilding and Adapting

It’s been five months since the devastating fires swept through parts of Los Angeles, leaving a trail of destruction, displacement, and uncertainty. While the region is no stranger to wildfires, the intensity of this latest disaster destroyed a record number of over 40,000 structures displacing homes and businesses affecting property owners, investors, and tenants alike.

Today, as the smoke has long cleared, the commercial real estate (CRE) market in Los Angeles is navigating a complex path of recovery—one that reveals both the vulnerabilities and the resiliency built into our city’s infrastructure.

1. The Immediate Impact: Structural Losses and Market Disruption

In the immediate aftermath of the fires, several commercial properties—particularly in the outlying industrial zones and retail strips near canyon areas—suffered severe damage or complete loss. Insurance claims surged, and many landlords faced the dual challenge of rebuilding and retaining tenants during uncertain times.

According to CAL FIRE, the damage cost millions in business interruptions, especially in small business corridors reliant on foot traffic and community presence.

2. Supply Chain Woes Meet Construction Delays

With Southern California already facing post-pandemic supply chain issues, the fires added another layer of pressure. Rebuilding efforts have been slowed by shortages in both labor and materials. Steel prices have remained volatile, and the demand for construction crews has outpaced availability in many areas.

As ENR California recently reported, general contractors are experiencing extended timelines for fire restoration work, with some projects delayed by more than six months due to permitting and infrastructure complications.

3. Insurance Coverage Reevaluated—Especially in High-Risk Zones

Five months later, one of the most noticeable shifts in the CRE space has been in insurance policies. Property owners in hillside and canyon-adjacent areas—traditionally viewed as high risk—are facing skyrocketing premiums, if they can obtain coverage at all.

In response, property managers and landlords are reevaluating their risk strategies. Some are implementing defensible space protocols and retrofitting buildings with more fire-resistant materials. Others are consolidating assets or shifting investments to lower-risk regions.

The California Department of Insurance has encouraged property owners to explore mitigation programs that may help reduce costs and improve coverage access in fire-prone zones.

4. Tenant Behavior Is Shifting—Especially Among Retail and Industrial Users

The fires have reshaped how tenants evaluate properties. For retail users, proximity to emergency response services and strong community infrastructure is now a higher priority. Meanwhile, industrial users are factoring in fire zone maps when signing new leases or renewing existing ones.

In a recent Urban Land Institute (ULI) discussion, commercial tenants emphasized the importance of emergency preparedness in property marketing and site selection—marking a cultural shift in the way safety is perceived as part of a property’s value proposition.

5. Opportunity in Recovery: Adaptive Reuse and ESG Momentum

Despite the devastation, new opportunities are emerging. Damaged or underutilized commercial properties are now candidates for adaptive reuse, including conversions into mixed-use developments or essential services like health centers and co-warehousing hubs.

Environmental, Social, and Governance (ESG) goals are also coming into sharper focus. Investors and developers are increasingly seeking to incorporate resilient design, solar infrastructure, and fire-mitigating landscaping into new projects. The result? A growing segment of future-proof assets that can withstand climate-related events.

A recent case study by USGBC-LA highlights how green building practices are not only helping communities recover faster but also adding long-term value to assets through operational efficiency and tenant appeal.

Final Thoughts

The road to recovery is far from over, but five months after the LA fires, the commercial real estate market continues to show signs of strength, adaptability, and forward thinking. Property owners who act decisively—by retrofitting buildings, rethinking land use, and leveraging sustainable practices—are positioning themselves for long-term success in a climate-challenged future.

As Los Angeles rebuilds, the commercial real estate community must continue to learn, innovate, and prepare—not only for the next disaster but for a more resilient urban landscape.