Los Angeles Industrial Real Estate Has Bottomed Out — Is This the Last Window?

By the end of 2025, the Los Angeles industrial real estate market had stabilized. Key indicators—including available space, new leasing activity, and move-outs—stopped deteriorating.

Large-scale lease givebacks seen in 2023–2024 did not repeat. While demand is not strong, the market is now able to absorb new industrial supply. This marks a clear shift from the prior two years, when widespread downsizing and early terminations pushed more than 30 million square feet back to the market.

The turning point was driven largely by tariff uncertainty. In 2025, repeated tariff adjustments led many importers and distributors to delay warehouse decisions, avoiding long-term commitments until cost structures became clearer. Once companies completed internal reviews and restarted expansion plans, leasing activity picked up in the second half of the year.

Leasing recovery in 2025 was broad-based. Both total leased area and the number of transactions increased. Third-quarter new leasing reached about 13 million square feet, near historical highs. Full-year leasing exceeded 40 million square feet, the strongest level in four years and close to the 2020–2021 peak. Deal volume also remained high, with nearly 1,000 leases signed per quarter and more than ten large transactions over 250,000 square feet.

At the same time, the vacancy upcycle ended. After rising for more than three years, available space stabilized by mid-2025. By year-end, availability stood slightly above 8 percent—still higher than long-term averages, but the lowest among major West Coast markets. Net absorption for the year was roughly flat, as move-ins and move-outs were nearly balanced.

Rents have adjusted but are no longer falling.

Average asking rents ended the year around 1.43 dollars per square foot, well below the prior peak above 1.75. The rate of decline slowed in the fourth quarter, suggesting rents are near the bottom of this cycle. Concessions remain common, with landlords still offering free rent on longer leases.

What this means in practice:

For tenants, conditions are workable. Prices are unlikely to fall much further, but negotiation room still exists. For landlords, the market is improving, but pushing rents higher is premature—the priority remains occupancy. Waiting carries risk: as demand gradually returns, well-located, move-in-ready warehouses are being taken first, reducing the quality of available options rather than driving prices materially lower.