Los Angeles
The Los Angeles industrial real estate market, once the tightest in the nation, is undergoing a dramatic shift in 2025. For years, e-commerce, port activity, and limited land availability drove record-low vacancies and double-digit rent growth. But the tide has turned. Vacancy is rising, rents are softening, and Landlords are offering concessions not seen in nearly a decade.
Here’s what’s happening on the ground across LA County and what it means for tenants, landlords, and investors.
According to CoStar data, industrial vacancy in Los Angeles County is around 6.0% as of early-2025, up from roughly 4.0% a year earlier. Meanwhile, availability, including spaces being marketed that are not yet vacated, has climbed to about 8.4% in Q2 2025.
This marks a notable shift: two years ago vacancy was much lower, often under 3%, but now new supply, tenant move-outs, and weakening demand, especially in logistics and distribution, are weighing on the market.
The U.S. commercial real estate market (including industrial properties) has been giving back space: net absorption turned negative again in Q2, and since the start of the year over 83.9 million square feet has been returned to the market.
Countywide, effective rents are sliding even faster, as landlords offer concessions such as:
Multiple months of free rent
Larger tenant improvement (TI) packages
Shorter lease commitments to attract tenants
Submarket Performance: Winners & Losers
Central LA (Vernon, Commerce, Downtown): Still relatively resilient, fueled by food production, apparel, and last-mile logistics. Vacancy is lower than countywide averages, but rent drops show tenants are pushing back on pricing.
South Bay (Carson, Torrance, Long Beach): Among the hardest hit. Proximity to the ports is less of a driver right now, as container volumes remain volatile. Newer logistics facilities here are competing heavily on concessions.
Mid-Counties (Santa Fe Springs, Whittier, Cerritos): Vacancy is climbing quickly. These older stock properties face headwinds, with tenants opting for higher-quality buildings elsewhere.
San Fernando Valley: Infill demand remains steady, but small-bay users are more price sensitive, creating longer lease-up times.
What’s Driving the Shift?
Port Volatility – Cargo volume at the Ports of Los Angeles and Long Beach has seesawed in recent quarters, limiting warehouse demand tied to imports. [LA Times]
Speculative Supply – Developers added millions of square feet of speculative product during the boom years, much of which remains unleased.
Higher Interest Rates – Financing costs have risen, slowing investment activity and pushing Landlords to be more flexible with lease terms.
Tenant Leverage – With more space available, tenants now negotiate aggressively and often win.
Tenants: Now is the time to secure favorable lease terms. Concessions, lower asking rents, and flexible commitments are all on the table.
Landlords: Focus on asset quality and tenant retention. Modern features like clear heights, loading docks, EV-ready infrastructure remain differentiators.
Investors: Distress may create opportunities to acquire older properties at a discount and reposition them with upgrades.
Developers: Build-to-suit and pre-leased projects are safer bets, while speculative development carries higher risk.
The Los Angeles industrial market in 2025 is in flux and everyone’s feeling it. Vacancies are creeping up, rents are cooling off, and the balance of power between landlords and tenants is shifting fast. In this climate, it’s not just about square footage, it’s about location, build quality, and how fast you can pivot. The short-term headwinds are real, but let’s not forget that Southern California still runs the logistics game. Ports, infrastructure, and demand fundamentals keep industrial real estate standing strong as one of the most resilient plays in the region. Now might just be the right time to buy.
At Eve Capital, we track market shifts to help our clients make informed, strategic decisions. Whether you’re exploring leasing opportunities, repositioning assets, evaluating investment options, or just want to know how your portfolio compares in this market, our team provides data-driven insights and tailored solutions to navigate today’s industrial landscape with grace. Let’s connect.
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