Los Angeles CRE Market Update: 2025 Trends and What Investors Should Watch

The commercial real estate (CRE) landscape in Los Angeles is undergoing dynamic shifts in 2025, shaped by changing work habits, evolving tenant demands, and broader economic factors. Whether you're an investor, developer, or tenant, staying on top of these changes is essential for making strategic decisions.

Office Market: A Slow but Strategic Recovery

The Los Angeles office market continues to adapt in the wake of hybrid work models. While vacancy rates remain elevated, recent data from CBRE’s Q1 2025 MarketView Report shows signs of stabilization in submarkets like Culver City and Burbank. Tenants are gravitating toward Class A spaces with flexible layouts, wellness features, and proximity to transit.

Notably, some companies are downsizing square footage but upgrading quality, a trend known as “flight to quality,” also observed in JLL’s Los Angeles Office Insight.

Industrial Real Estate: Still a Powerhouse

The industrial sector in LA remains strong, especially near ports and logistics hubs. With the Ports of LA and Long Beach maintaining high cargo throughput, demand for last-mile delivery and warehouse spaces continues. Bisnow reports that lease rates in Inland Empire and South Bay are climbing, though developers are cautiously moderating new builds due to rising construction costs.

Logistics tenants and e-commerce operators are also showing a preference for green-certified buildings—a trend that aligns with California’s stricter environmental regulations in 2025.

Retail Revival in Key Nodes

Despite challenges in the national retail landscape, several retail corridors in Los Angeles—such as Melrose Avenue and La Cienega—are experiencing a boutique revival, driven by experiential brands and pop-ups. Retail Dive highlights LA’s adaptive reuse projects, where old theaters and warehouses are transformed into creative retail or mixed-use spaces.

“Retailers are looking for unique, story-rich environments that align with their brand identities,” says a recent JLL Los Angeles retail report.

Multifamily: Holding Steady with New Renters

While interest rates have affected purchasing activity, the multifamily market remains a stable asset class. According to Yardi Matrix, occupancy in Los Angeles averages above 94% in 2025, bolstered by demand from young professionals and downsizing retirees. Rent growth is modest but consistent, with increases seen primarily in urban-core neighborhoods like Downtown LA and West Adams.

What's Next?

Investors should watch for continued cap rate compression in prime assets, especially in submarkets benefiting from infrastructure investments like the Metro Rail expansion. Additionally, as LA prepares for the 2028 Olympics, public-private partnerships and transit-oriented development are expected to boost long-term CRE values.

Whether you're diversifying your portfolio or repositioning assets, understanding the nuances of the LA market is key. For more insights or tailored investment strategies, connect with local experts or explore Eve Capital's recent CRE advisory blog.