Q1 2025 Los Angeles Industrial Market Report – Absorption, Vacancy & Rent Trends

The Los Angeles industrial real estate market marked a major turning point in Q1 2025, recording its first quarter of positive net absorption after nine consecutive quarters of decline. Total positive absorption reached 2.8 million square feet (msf), signaling renewed occupier confidence and activity across most submarkets. This upswing was primarily fueled by strong leasing activity in the San Gabriel Valley and Central Los Angeles regions.

Key move-ins included US Elogistics, which occupied 694,400 square feet in City of Industry; Source Logistics, which leased 374,400 square feet in Montebello; and YiTong Investments, which took 232,000 square feet, also in City of Industry. While Ventura County and the Mid-Counties submarkets did not contribute to the positive absorption trend, the overall performance was robust enough to reduce the metro-wide vacancy rate by 20 basis points from the previous quarter, settling at 6.5%. However, that figure is still…

Warehouse Rental Rates Show Signs of Softening

In response to shifting market conditions, the average asking rental rate declined to $1.38 per square foot (psf), representing a 0.7% decrease from Q4 2024 and an 8.6% drop year-over-year. While rates are softening, they remain significantly elevated—still 64% higher than pre-COVID levels. Analysts expect rents to continue a gradual downward trend as supply and demand dynamics begin to rebalance.

Top leases of the quarter were concentrated in the City of Industry, where Jakks Pacific Inc. renewed 799,900 square feet, US Elogistics signed for 694,400 square feet, and YiTong Investments leased 232,000 square feet. These large transactions reflect sustained demand for functional industrial space in well-located logistics corridors.

Market Outlook: Stabilization on the Horizon

The strong finish to 2024 carried into the first quarter of 2025, with improving fundamentals and signs of market stabilization. Some landlords are currently holding off on new listings or price adjustments, adopting a cautious, wait-and-see approach in response to inflation and shifting trade policies, including the implementation of new tariffs.

Despite elevated asking rents and broader macroeconomic headwinds, the Los Angeles industrial market remains one of the nation’s most resilient. Its enduring strength is underpinned by limited new supply, continued tenant demand, and its critical proximity to the Ports of Los Angeles and Long Beach—two of the most vital logistics hubs in North America.

As 2025 unfolds, further market stabilization is expected, with rents and vacancy gradually leveling out, paving the way for sustained long-term growth.