MARKET DRIVERS
The industrial leasing and sales market continues to show relative resilience despite ongoing global uncertainty and economic instability. While multiple international conflicts, elevated interest rates, and new tariff policies have created headwinds, logistics demand remains steady. Rental rates and sale prices have continued to trend downward, to the point now where the perceived value proposition is increasing overall activity.
LEASING MARKET
Leasing activity is picking up, with increases in signed leases, tours, and inquiries. The recent 165,000 SF lease with Watson Land Company for Energy Logistics helped ignite a wave of leasing activity in the South Bay, where Watson has now leased or is close to leasing four additional vacancies. Prologis had a similar run in the Central submarket, filling four of its own vacancies. Rental rates for Class A are now below $2.00/SF gross, and Class B is mostly below $1.50/SF gross. Amazon is rumored to be close to signing a lease for Goodman’s new 500,000 SF facility in Long Beach. While vacancy persists, recent leasing activity indicates that tariffs and broader tradeconcerns did not cause all users to hit the pause button.
SALE MARKET
Institutional investors remain cautious when it comes to vacant assets, largely due to uncertainty around stabilized lease rates. However, transactions are occurring in sub
$300/SF range. As more sales fall below $300/SF, seller expectations—still anchored in peak pandemic pricing—may begin to reset. MetLife is currently marketing a two-building,
100,000 SF asset in Redondo Beach, and OMP has brought a 142,000 SF Amazon-leased facility to market just north of LAX. As these deals close, market participants will gain more
clarity around cap rates, which are currently projected to exceed 5.5%.
NEAR-TERM OUTLOOK
Despite ongoing questions about a potential recession, the industrial market shows early signs of recovery in both leasing and sales, though activity remains inconsistent. Declining rental and sale prices are drawing interest to well-located, high-quality buildings. If the economy can avoid significant disruption—whether from geopolitical tensions or further monetary tightening—and if interest rates ease, the second half of 2025 should see continued improvement.
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