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Industrial Market Report
Los Angeles – CA

Data Courtesy of CoStar™

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12 Mo Deliveries in SF

0 .5M

12 Mo Net Absorption in SF

0 .9M

Vacancy Rate

0 .7%

12 Mo Rent Growth

0 .6%

12 Mo Sale Volume

$ 0 B

The Los Angeles industrial sector is at the center of the 2 billion-SF Southern California industrial market, the largest in the country by most measurable factors. The metro has one of the lowest vacancy rates nationally, and rental rates, which have been increasing for over a decade, are pushing to new highs as demand for industrial product accelerated at the onset of the pandemic.

E-commerce users have strong demand for last-mile facilities as retailers advance an omnichannel approach to sales and delivery. Development is constrained by a lack of available land, and warehouse space is highly coveted due to an increase and backlog of cargo at the Southern California port complex. Local ports handle 78% of West Coast container volume and nearly a third of all imports to the United States. Additionally, a potential work stoppage at the ports when the dockworkers renegotiate their contract this summer could lead to further delays and some importers may choose to bypass Southern California completely.

Sales activity during the pandemic has been robust as institutional investors focused on industrial over retail and office sectors. Asset pricing and activity in the sector are projected to remain robust given investment capital ready to deploy into commercial real estate remains ample, and sector conditions have fared better than other major property types in the metro.

Although there have been 40.8 million SF delivered over the past decade, inventory levels have been constant as 35.1 million SF were demolished during that timeframe. Some properties have been scraped and redeveloped into modern logistics facilities while others, especially in the South Bay and West Los Angeles, have been converted to creative offices along the region’s expanding commuter rail network. High land costs and limited development sites inhibit new construction, and as a result, most inventory in Los Angeles is older and smaller than in many other industrial markets across the nation. The region also has a strong manufacturing base. The construction of large, modern distribution space to serve the Southern California region is primarily developed east of L.A. County in the Inland Empire.

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