— Matt Moore and Wes Hunnicutt of Stream Realty Partners —
The Los Angeles industrial real estate market is stabilizing after a historic run of record-high rents and the all-time-low vacancy seen in 2022 and 2023. Pandemic-driven demand pushed users to take on additional space at a rapid pace, with supply chain concerns forcing tenants to carry more inventory.
As the pandemic subsided, the market began a softening period in 2024 through early 2025. This brought about a massive rent correction as tenants began to give back space and right-size their operations.
Stabilization has begun, however, and most investors feel the market has found its bottom and is beginning to rebound at a normalized, moderate pace. Vacancy rates at the peak were less than 2 percent in a market with nearly 1 billion square feet of inventory, while rates hit $1.85 per square foot (triple net) in early 2023.
Los Angeles’ industrial market has now settled at about 6 percent and $1.43 per square foot, which most would consider healthy.
Today, tenants have options when looking for larger blocks of space, and they’re no longer forced to pay record-high rents with minimal concessions from landlords.
Third-party logistics providers have continued to be the largest users of space in the infill markets near the ports, spilling into Central LA. Aerospace is another industry showing positive activity. Andruil Industries recently signed a lease at Douglas Park in Long Beach for nearly 1.2 million square feet. The project will feature more than 450,000 square feet of industrial and R&D space with construction slated to begin later this year. The LA market has seen a renaissance in the aerospace and defense industries, with new companies backfilling spaces vacated by companies like Boeing.
Institutional capital has also begun to reenter the market. Many institutional investors made significant investments during the market peak, acquiring assets at historically low cap rates or record land prices…only to find they were unable to achieve the rents necessary to generate positive returns. As a result, investors largely paused activity for several years, wary of repeating those mistakes.
With rents now stabilizing, investors can once again underwrite deals with greater confidence. Nearly a half dozen land sites have come to market in the first quarter of 2026, all of which are currently under contract and scheduled to close over the coming months.
With all of this considered, 2026 looks to be the year of stabilization. Market conditions have become more predictable, and the prolonged pause of capital sitting on the sidelines appears to be coming to an end. While most do not anticipate meaningful rent growth, there is a growing consensus that the market has reached its floor.
— By Matt Moore and Wes Hunnicutt, Executive Vice Presidents of Stream Realty Partners. This article was originally published in the April 2026 issue of Western Real Estate Business.