MARKET DRIVERS
As the third quarter closes, the Ports of Long Beach and Los Angeles remain key drivers for the Los Angeles industrial market. After a strong August, activity noticeably slowed in September, and the balance of the year is projected to remain sluggish. Logistics and retail warehouse are loaded up on inventory and freight movement earlier than normal, resulting in a “peak season” that appears average to weak.
LEASING MARKET
The leasing market appears to be stabilizing, with demand trending upward. There are currently more active requirements across all sizes than at any time in 2025. Amazon has more than one million square feet of active requirements, with leases underway in at least two buildings. Hadrian took the Bridge 200,000 SF building on Normandie, expanding their presence in Torrance. The expansion of the manufacturer specializing in building autonomous factories is yet again another indicator that advanced manufacturing, space, and satellite companies are continuing to expand their footprint in the Southbay. Further evidenced by a major rocket company leasing 200,000 SF in Hawthorne. While rates continue to hover near the bottom, landlords are still offering significant concession packages, in the form of free rent and tenant improvement allowances, to attract tenants.
SALE MARKET
The most notable third quarter sale was Terreno Realty’s acquisition of two leased 50,000 SF warehouse buildings in North Redondo Beach from MetLife. Both properties are leased for another two years and complement Terreno’s existing holdings in the area. North Redondo Beach also saw a recent lease of over 250,000 SF previously occupied by Northrop, now leased by Impulse Space, having never hit the open market. Terreno’s acquisition was priced around $355 PSF.
NEAR-TERM OUTLOOK
Looking forward, no major changes are expected in vacancy, availability, or rental rates through year-end. However, as the Fed continues to cut interest rates, both leasing and sales activity in the South Bay are expected to show continued signs of stabilization.
3Q 2025 Los Angeles Industrial Market: Key Data Points
Explore our full Los Angeles industrial market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Leasing Activity Rebounds: 6.6M SF leased in Q3 2025, with Amazon and advanced manufacturing firms driving demand.
- Vacancy Rate Holds Steady: Direct vacancy reached 5.8%, up slightly from 5.1% in Q3 2024.
- Net Absorption Negative: Net absorption was -576K SF, reflecting ongoing tenant turnover and backfills.
- Average Asking Rent Declines: Average sale price was $264.85/SF, with notable trades like The Concourse portfolio at $266.70/SF.
- Construction Pipeline Active: Over 1.3M SF under construction, including projects in Mid-Cities, SGV, and South Bay.
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