— By George Crawford of Kidder Mathews — In the city where heart-wrenching Hollywood movies originate, we bear witness to the harrowing coming-of-age story for one of the largest office submarkets in one of the largest metropolitan economies on earth, Downtown Los Angeles (DTLA). “I’m going to make him an offer he can’t refuse.” The Godfather, spoken by Don Vito Corleone It was almost too good to be true. In 2016, DTLA was the star of a commercial real estate love story. Landlords and tenants were captivated by a compelling script about creative tenants fleeing the expensive Westside into the welcoming arms of DTLA and sexy adaptive reuse offices. A steady flow of capital inspired 50 percent of DTLA’s submarket to trade in a 24-month period. Downtown was poised to rival the traditional metropolis, while retaining its gritty charm. Like any Hollywood romance, the chemistry was undeniable and the ending seemed predictable: sustained rent growth and long-term tenant demand. Then came the plot twist. “Where are we going so very quickly?” The New Adventures of Winnie the Pooh, spoken by Piglet The pandemic accelerated what technology had been threatening for years. Workplace flexibility and changing corporate …
— By Kitty Wallace of Colliers — The Los Angeles multifamily market is undergoing a short-term reset as a recent wave of deliveries has softened rents and modestly increased vacancy. However, this dislocation is proving transitory as development has slowed dramatically and the forward pipeline is effectively falling off a cliff beyond 2026, reinforcing what remains one of the most supply constrained and fundamentally durable markets in the country. Since the onset of COVID, the Los Angeles market has contended with elevated legislative risk, homelessness and crime concerns, modest population fluctuations, rising operating expenses, and, most notably, increased insurance premiums and utility costs. Yet, with a vacancy in the mid-5 percent range, this multifamily market continues to outperform the national average of roughly 8 percent. Rents are now stabilizing and beginning to inflect upward as concessions burn off and demand normalizes. Policy Headwinds, Construction Challenges, Emerging Tailwinds The ULA tax, imposing a 5.5 percent levy on transactions above $10.6 million, has further constrained new construction. This has made it increasingly difficult for projects to pencil and has driven many sites toward lower-density uses or affordable housing backed by subsidized capital. As a result, much of the current development activity is concentrated among …
— By Mark Damiani of CBRE — Los Angeles has always been a market that requires conviction. Recent headlines have tested that conviction, but institutional capital continues to look through short-term noise and focus on long-term fundamentals. By that measure, Los Angeles remains one of the most structurally advantaged retail markets in the United States, defined by scale, supply constraints and global relevance. The market today is not without challenges, but fundamentals are stabilizing and capital is re-engaging following a meaningful repricing cycle. A Global Gateway with Structural Advantages Greater Los Angeles is one of the largest retail markets in the country, with about 378 million square feet of inventory. It benefits from a diverse economic base, significant tourism, and a consumer profile that spans both necessity and luxury spending. At the same time, new supply remains extremely limited. Total deliveries in 2025 were negligible relative to the size of the market, continuing a multi-year trend of underdevelopment. Entitlements, construction costs and land availability remain significant barriers, particularly in infill locations. This combination of scale and scarcity continues to underpin long-term investment theses for institutional capital. Leasing Fundamentals: Stabilization with Positive Momentum Leasing fundamentals across LA have proven more resilient than broader narratives …
— 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 …
— By J.C. Casillas of NAI Capital — Orange County’s multifamily sector entered 2026 in a period of moderation. Following a recent peak in deliveries, fourth-quarter 2025 saw developers pull back sharply, allowing vacancy to stabilize at a tight 3.8 percent even as rent growth plateaued. The shift reflects strategic caution as elevated interest rates and pricing expectations continue to shape underwriting. Demand and Supply Navigating the ‘Supply Cliff’ Vacant units inched up 0.1 percent quarter over quarter to 11,926 but remained down 1.6 percent year over year, signaling gradual relief from earlier supply pressure. Developers delivered just 430 new units in the fourth quarter, a 26 percent drop from the third quarter. This brought year-to-date deliveries to 1,979 units, down 43 percent from 2024. With only 4,775 units still under construction — a 14 percent annual decline — the market is approaching a potential supply cliff that could tighten inventory by 2027. Vacancy held at 3.8 percent, suggesting steady renter demand. Average asking rents slipped $9 from the third quarter to $2,702 per unit. The good news is it still posted a 1.7 percent year-over-year gain. Since the 2024 development peak, higher borrowing costs and construction expenses have tempered the …
— By Wes Hunnicutt and Matt Moore of Stream Realty Partners — Following a record-low vacancy of 1.4 percent in fourth-quarter 2022, Orange County’s industrial market has experienced a sustained period of rising vacancy and negative net absorption, driven by broader economic caution, elevated interest rates and softening demand for space. However, it also showed signs of slight improvement at the end of 2025. Vacancy stood at 6.1 percent at the end of last year, down slightly quarter over quarter from 6.2 percent, but higher than 5.5 percent 12 months ago. For context, vacancy immediately prior to the pandemic was 3.3 percent. Availability, which includes all spaces listed on the market for lease, came in at 7.5 percent at the end of last year. A defining feature of recent quarters has been low tenant demand for space, with seven consecutive quarters of negative absorption. This reflects cautious tenant behavior as businesses delay expansion decisions amid economic headwinds and higher borrowing costs. Fourth-quarter 2025 ended this streak with the market experiencing positive net absorption of 285,000 square feet. Larger distribution and logistics facilities experienced increased pressure and longer lease-up timelines, whereas smaller spaces of less than 100,000 square feet have performed …
— By Tim Donald of JLL Capital Markets — When investment capital flows into Orange County’s office market today, it’s revealing a fundamental shift that sophisticated investors can’t afford to ignore: the distinction between quality and commodity office space has never been more pronounced, and that gap is only widening. The challenge for many investors has been identifying opportunities that offer both stability and upside in an environment where traditional core assets provide minimal growth while pure value-add plays carry significant execution risk. What we’re seeing emerge in Orange County is a compelling middle ground, deals that feel core-plus but deliver value-add returns, and there’s substantial liquidity chasing these opportunities. The Tier System Reshapes Investment Strategy JLL’s national office team has developed a tiering system that divides office properties into distinct quality categories based on amenities, location and tenant appeal. In Orange County, this frame-work has revealed a market operating on fundamentally different planes. Tier I assets, representing a small fraction of the county’s inventory, are demonstrating exceptional resilience while Tier II properties continue to attract significant tenant and investor interest. This isn’t just academic categorization. The performance differential shows that investors are willing to pay premiums for assets with clear …
— By John Read of CBRE Retail Investment Properties-West — Orange County is often defined by its 42 miles of Pacific coastline, its globally recognized theme parks like Disneyland and Knott’s Berry Farm, and retail landmarks like South Coast Plaza and Fashion Island. Those assets contribute to the region’s visibility and appeal. But they are not what ultimately sustain its retail performance. The county’s strength is rooted in its scale and demographics. Encompassing nearly 800 square miles, Orange County is home to more than 3.1 million residents and one of the most diverse populations in the U.S., including the second-highest share of foreign-born residents in Southern California. The county’s strong retail fundamentals are supported by significant affluence and education. Average household income exceeds $157,000, and 46 percent of residents hold a bachelor’s degree or higher. Orange County is also home to major employers, including Disney, UC Irvine, Providence, Kaiser Permanente and Hoag, maintaining a low unemployment rate of 3.9 percent. These factors collectively make Orange County’s retail property fundamentals undeniable. The Orange County retail market ended the fourth quarter with a countywide availability rate of 3.9 percent, down 10 basis points from the previous quarter. Several submarkets were even tighter. …
— By Richard Schwartz of SRS Real Estate Partners — The Inland Empire industrial market has undergone significant recalibration over the past 24 months, moving from the “too hot” environment of 2022 and 2023 marked by record construction and rent escalation to a period of normalization. Construction-driven vacancy has pushed the market into a digestion phase, marked by softening rents, adjusting sale prices and a reset in landlord-tenant expectations. These dynamics will unlock new opportunities as we enter 2026. Limited New Development Creates Breathing Room CoStar data compiled by SRS shows that new construction peaked in 2023 with about 29.5 million square feet delivered. This was followed by 17.8 million square feet in 2024 and an expected 16 million square feet in 2025. Deliveries are projected to fall to roughly 10 million square feet in 2026, making it the lightest post-pandemic year of new supply. This delivery includes several notable projects, such as Amazon’s 2.5-million-square-foot “middle-mile” facility in Hesperia, a 650,000-square- foot storage facility in Desert Hot Springs and a 1.2-million-square-foot facility in Apple Valley that’s leased to Lecangs. This means that more than half of the Inland Empire’s 2026 construction pipeline is already pre-leased, reducing speculative exposure while accelerating the rise …
— By J.C. Casillas of NAI Capital — The Inland Empire office market continues to show signs of recovery, with broad-based tenant demand pushing occupancy higher and absorbing vacant direct space. While landlords are holding asking rents steady to capitalize on the improving environment, direct vacant space decreased 3.2 percent quarter over quarter and 16.4 percent year over year. Vacant sublease space fell a solid 4.5 percent quarter over quarter, though it nearly doubled year over year to 135,149 square feet at year-end. Renewed tenant activity continues to chip away at vacant space, reinforcing the recovery. In fourth-quarter 2025, net absorption — driven primarily by direct space — totaled about 557,000 square feet for the year, marking a meaningful milestone in the market’s rebound. The vacancy rate edged down 10 basis points quarter over quarter, supported by 106,095 square feet of space coming off the market. It now stands at 4.7 percent, 80 basis points lower than a year ago. Stabilization has been supported by shifting workplace strategies and evolving remote work patterns. Since the economy reopened following the pandemic, occupied office space has increased by nearly 2.1 million square feet, surpassing pre-pandemic levels. Sublease vacancy has fallen 22.5 percent …
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