— By Patrick Barnes of Avison Young — The Los Angeles industrial property market has experienced increasing space availability and shifting tenant priorities over the past several quarters. Due to concerns about potential labor strikes at East and Gulf Coast ports, the anticipated surge in short-term sublease demand failed to materialize in the fourth quarter of 2024. Additionally, with a labor contract agreement reached in January, any lingering expectations that rerouted shipments would continue to bolster West Coast activity have largely dissipated. Despite a 21.7 percent year-over-year increase in TEU (twenty-foot equivalent unit) volume from 2023 to 2024, sublease availability has risen significantly as TEU tenants have either warehouse capacity or shipments leaving the region by rail. Companies today are reassessing their space needs, focusing on cost savings and operational optimization rather than expansion to deal with inflation and tariffs. Sublease space increased by 12.8 percent quarter over quarter, reaching 11.2 million square feet and pushing the overall availability rate to 9.3 percent. These changes have also led to a drop in industrial rental rates. After peaking at $1.97 per square foot in 2023, average rents have fallen 26.4 percent to $1.45 per square foot in fourth-quarter 2024. However, Class …
