Q1 2025 Greater Los Angeles Industrial Market Summary

The Greater Los Angeles industrial market continued to reflect shifting dynamics in Q1 2025 as leasing velocity remained steady, but asking rates declined amid a tenant-favorable environment. The region recorded net negative absorption of 2.0 million square feet (SF), though strong gross activity (13.9M SF) and 6.6 million SF of space under construction signal continued long-term interest in the market.

The average asking lease rate across Greater L.A. dropped to $1.31 per square foot NNN, down 7.7% quarter-over-quarter and 13.8% year-over-year. Despite these declines, rates remain 64% higher than pre-pandemic levels. Vacancy ticked up slightly to 4.6%, while sublease availability increased to 1.1%—the highest in several years.

Key leasing activity was driven by logistics providers, led by U.S. E-Logistics’ 694,400 SF lease in the City of Industry. Other notable leases included Wally’s Distribution (274,211 SF in Lancaster), GoldenCorr Sheets (256,993 SF renewal), YiTong Investments (232,000 SF), and HYTX Logistics (217,756 SF expansion).

From a sales perspective, the largest transaction of the quarter was Norge Bank’s $1.07B portfolio acquisition, including an 883,971 SF manufacturing facility in Long Beach. Other sales included Pleaser USA ($99.9MM), Prologis ($89.7MM), Bentall Green Oak ($65MM), Lucky Taro ($57MM), and Future Foam ($52.7MM).

Across all submarkets, total vacancy in Greater L.A. climbed to 4.6%, with direct vacancy at 4.1%. The South Bay and Downtown L.A. submarkets saw the steepest absorption losses at -1.2M SF and -533K SF respectively. In contrast, the San Gabriel Valley posted positive absorption of over 323K SF.

Development remains active, though slowed compared to 2024. Total deliveries in Q1 reached 1.19 million SF, while 6.6 million SF remains under construction. The South Bay led in new deliveries (549,847 SF), followed by Ventura County (473,157 SF).

Sector breakdowns of top leasing activity revealed strong demand from manufacturing (41%), logistics (37%), and construction (14%) tenants. As policy uncertainty and macroeconomic headwinds continue, leasing momentum is expected to remain moderate while rental rates stabilize further.

Outlook for 2025:
The Los Angeles industrial market is transitioning into a more balanced phase. While tenant concessions and rate adjustments may continue in the near term, the market remains structurally sound. Limited new supply, strong port proximity, and robust logistics infrastructure will continue to support industrial demand across Greater L.A.