Los Angeles Industrial Market Report

The following reflects Los Angeles industrial market conditions as of Q2 2026.

MARKET DRIVERS

Leasing activity picked up across the Los Angeles industrial market in Q2 2026, driven by improving user demand and market optimism. Geopolitical volatility in air and ocean freight has pushed up transportation and fuel costs, which continues to factor into occupier decisions, yet demand remains strong among advanced manufacturing, aerospace/defense, satellite, warehouse, 3PL, and traditional manufacturing users. The South Bay submarkets have been especially active, where new construction in Torrance is commanding some of the highest rental rates in the region. Class A product continues to see the strongest demand, though Class B space is gaining momentum as well.

LEASING DEMAND & SALE MARKET

Notable lease transactions this quarter included Valar Atomics’ 500,000 SF lease in a Morgan Stanley-owned Class A building in Torrance, Divergent Technologies’ 400,000 SF lease in Long Beach, and Karman Space & Defense’s 150,000 SF lease in Torrance at a base rate of $2.50 NNN. Hadrian pre-leased two buildings in Sares Regis’ Phase III development at the former Toyota campus, while Watson Land Company signed two new logistics leases totaling 150,000 SF — 50,000 SF with Stevens Global and 100,000 SF with H2O Logistics. Rexford’s two new buildings on Voyager in Torrance have also drawn strong interest and are expected to be fully leased ahead of their September completion.

Sale pricing appears to be stabilizing, even as a shift in Fed positioning toward more probable rate hikes tempers the pace of transaction activity relative to leasing. Notable sale transactions included Negresco Property Group’s off-market acquisition of a three-acre site north of LAX for $135 per land foot, and Lift Partners’ purchase of a Terreno-owned Class B building in Torrance.

NEAR-TERM OUTLOOK

Advanced manufacturing, aerospace/defense, satellite, and space-related companies are expected to remain active across Los Angeles, particularly in the South Bay. Traditional warehouse and 3PL users are likely to keep pursuing functional space as availability tightens. Demand should stay strongest for well-located buildings, while less functional Class B properties may continue to face leasing headwinds. Sale activity is expected to improve modestly as pricing stabilizes and financing remains available to qualified owner-users.

Frequently Asked Questions

What is the industrial vacancy rate in Los Angeles for Q2 2026?

The direct vacancy rate in the Los Angeles industrial market was 6.0% in Q2 2026, up from 5.9% in Q1 2026 and 5.6% in Q2 2025, a 7.65% year-over-year increase, according to Kidder Mathews research. The total vacancy rate, which includes sublet space, was 6.9% market-wide.

What is the total availability rate for Los Angeles industrial space in Q2 2026?

The total availability rate was 8.2% in Q2 2026, down from 8.4% in Q1 2026 and 8.5% in Q2 2025, a 3.24% year-over-year decrease (Data source: CoStar). Availability includes space marketed for lease that is not yet vacant.

What are average industrial asking rents in Los Angeles, and how much do they vary by submarket?

The average direct asking lease rate was $1.37 PSF/month NNN in Q2 2026, down 6.16% year-over-year from $1.46, according to Kidder Mathews research. Submarket averages ranged widely, from $0.75 PSF in Lakewood/Hawaiian Gardens to $3.00 PSF in Arcadia/Temple City, with most core industrial submarkets clustering between roughly $1.20 and $1.70 PSF.

How much industrial leasing activity took place in Los Angeles in Q2 2026?

Total industrial lease transactions reached 6,210,673 SF in Q2 2026, according to Kidder Mathews research. Year-to-date leasing volume of 16,672,362 SF trailed the 38,495,313 SF recorded over the same period in 2025, a 56.69% year-over-year decline.

What was industrial net absorption in Los Angeles in Q2 2026?

Direct net absorption was negative 863,475 SF in Q2 2026, meaning more industrial space was vacated than newly occupied during the quarter, according to Kidder Mathews research. The South Bay (-632,101 SF) and Central (-555,105 SF) submarket groups accounted for the largest share of the quarter’s negative absorption.

What is the industrial construction pipeline in Los Angeles?

New industrial deliveries totaled 184K SF in Q2 2026, according to Kidder Mathews research. Active projects under construction include Prologis’ 283,621 SF Commerce Gateway building in Central Los Angeles, delivering September 2026, and Goodman Group’s 263,409 SF LAX01 Vernon project, delivering June 2026, among others across the Central, Mid-Cities, and South Bay submarkets.

What was the largest industrial sale in Los Angeles in Q2 2026?

The largest sale of the quarter was the Golden West Food building in Vernon (Central Los Angeles submarket), a 238,457 SF property that traded for $87,142,000, or $365.44 PSF, with New Mountain Capital acquiring the asset from Golden West Food Group, according to Kidder Mathews research.

What was the largest industrial lease signed in Los Angeles in Q2 2026?

The largest lease of the quarter was Valar Atomics’ 512,490 SF lease at Bridge Point South Bay in the South Bay submarket, signed in May 2026 with landlord Morgan Stanley & Co., according to Kidder Mathews research. Divergent Technologies also signed a 415,312 SF lease at Bridge Point Long Beach in June 2026.

What are average industrial sale prices and cap rates in Los Angeles?

Average industrial sale prices reached $283.59 PSF in Q2 2026, with an average cap rate of 5.7%, according to Kidder Mathews research. Sale transaction volume of 1,539,519 SF for the quarter was down 70.89% year-over-year from 11,905,235 SF in 2025 YTD.

What is the outlook for the Los Angeles industrial market?

Advanced manufacturing, aerospace/defense, satellite, and space-related companies are expected to remain the most active tenant categories in Los Angeles, particularly in the South Bay, according to Kidder Mathews research. Demand should stay strongest for well-located, functional buildings, while less functional Class B space may continue to face leasing challenges, and sale activity is expected to improve modestly as pricing stabilizes.

Last updated: Q2 2026. Data source: Kidder Mathews Research, CoStar, EDD. Compiled by the Kidder Mathews Research Group.

2Q 2026 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 Remains Strong: Industrial leasing volume totaled 6.2M SF during 2Q 2026, supported by continued demand from aerospace, manufacturing, logistics, and 3PL occupiers.
Vacancy Rate Edges Higher: The direct vacancy rate increased to 6.0% in 2Q 2026, up from 5.6% one year ago.
Asking Rents Moderate: Average asking lease rates declined to $1.37 PSF NNN, a 6.2% decrease year-over-year.
Limited New Supply: New industrial deliveries totaled just 184K SF during the quarter, helping constrain available inventory despite softer occupancy trends.
Net Absorption Remains Negative: Direct net absorption totaled negative 863K SF during 2Q 2026, reflecting ongoing tenant right-sizing and move-outs across portions of the market.
Investment Pricing Stabilizes: Average sale prices reached $283.59 PSF with an average cap rate of 5.7%, indicating continued investor interest despite reduced transaction volume.

Submarket Statistics

Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	Total Availability Rate	2Q26 Direct Net Absorption (SF)	YTD Net Direct Absorption (SF)	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate (NNN)

Los Angeles Industrial Submarket Statistics 2Q 2026 — Central: includes Bell/Bell Gardens/Maywood, Commerce, Huntington Park/Cudahy, Los Angeles, Montebello/Monterey Park, Pico Rivera, South Gate, Vernon
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	Total Availability Rate	2Q26 Direct Net Absorption (SF)	YTD Net Direct Absorption (SF)	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate (NNN)
Bell/Bell Gardens/Maywood	7,710,083	2.9%	2.9%	3.8%	9,936	-56,277	0	$1.24
Commerce	45,524,656	6.6%	7.5%	7.1%	108,759	590,255	617,749	$1.29
Huntington Park/Cudahy	4,711,836	5.6%	5.8%	6.8%	-46,910	25,940	52,450	$1.00
Los Angeles	127,847,454	6.7%	7.0%	8.5%	-45,419	-240,610	655,658	$1.52
Montebello/Monterey Park	11,901,674	4.9%	5.4%	5.7%	-223,732	35,755	85,815	$1.35
Pico Rivera	10,277,489	7.0%	7.4%	7.0%	-102,682	-124,770	80,738	$1.37
South Gate	10,114,939	1.5%	1.5%	3.6%	5,594	6,537	0	$1.08
Vernon	44,973,090	6.3%	7.0%	9.1%	-260,651	-572,616	133,454	$1.23
Central	263,061,221	6.2%	6.7%	7.8%	-555,105	-335,786	1,625,864	$1.34

Los Angeles Industrial Submarket Statistics 2Q 2026 — Mid-Cities: includes Artesia/Cerritos, Bellflower/Downey, Buena Park/La Palma, La Mirada, Norwalk, Paramount, Santa Fe Springs, Whittier
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	Total Availability Rate	2Q26 Direct Net Absorption (SF)	YTD Net Direct Absorption (SF)	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate (NNN)
Artesia/Cerritos	13,115,014	5.7%	6.7%	12.3%	-22,734	-11,418	124,879	$1.08
Bellflower/Downey	5,711,853	1.9%	2.8%	3.0%	9,049	143,966	60,233	$1.78
Buena Park/La Palma	14,907,046	10.9%	18.5%	21.5%	26,520	-110,856	3,968	$1.27
La Mirada	13,245,301	12.3%	14.1%	20.1%	-478,538	-660,181	173,709	$1.23
Norwalk	2,925,358	2.1%	2.5%	1.9%	8,003	-40,319	23,159	—
Paramount	9,498,371	4.1%	4.1%	7.0%	-3,919	-82,139	79,156	$1.10
Santa Fe Springs	54,524,799	4.5%	5.0%	7.3%	68,139	254,317	343,258	$1.40
Whittier	4,042,410	14.7%	14.9%	15.4%	-4,747	212,726	28,778	$1.19
Mid-Cities	117,970,152	6.4%	8.0%	11.0%	-398,227	-293,904	837,140	$1.29

Los Angeles Industrial Submarket Statistics 2Q 2026 — San Gabriel Valley: includes Alhambra, Arcadia/Temple City, Azusa, Baldwin Park, City of Industry/DB/HH/RH, Covina/West Covina, Duarte, El Monte, Irwindale, La Puente, Glendora/La Verne/San Dimas, Monrovia, Pomona/Claremont, Rosemead/San Gabriel, South El Monte, Walnut
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	Total Availability Rate	2Q26 Direct Net Absorption (SF)	YTD Net Direct Absorption (SF)	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate (NNN)
Alhambra	2,306,602	1.4%	2.3%	2.4%	3,243	-10,509	2,610	$1.40
Arcadia/Temple City	3,146,879	5.8%	5.8%	6.1%	-7,233	-108,121	28,158	$3.00
Azusa	6,829,979	8.7%	11.8%	15.8%	183,918	13,268	86,886	$1.12
Baldwin Park	5,306,455	1.7%	1.7%	2.6%	22,310	47,914	28,903	$1.25
City of Industry/DB/HH/RH	77,739,403	3.9%	5.1%	6.0%	570,110	85,582	822,239	$1.37
Covina/West Covina	3,581,823	3.8%	4.2%	15.2%	-6,234	-27,913	47,412	$2.02
Duarte	1,740,877	9.6%	9.6%	3.1%	-50,286	-70,578	91,840	$1.22
El Monte	8,869,988	5.8%	5.9%	8.8%	22,703	-199,121	43,675	$0.98
Irwindale	13,453,830	6.9%	7.0%	5.8%	-55,346	-53,737	7,825	$1.21
La Puente	2,188,721	7.3%	7.3%	3.6%	46,113	51,513	69,110	$1.24
Glendora/La Verne/San Dimas	6,705,288	8.9%	8.9%	9.7%	-47,644	-77,792	15,449	$1.45
Monrovia	3,317,446	3.3%	3.3%	5.8%	258	-32,030	3,410	$1.70
Pomona/Claremont	20,178,819	3.2%	4.5%	6.9%	-26,251	-90,852	137,891	$1.12
Rosemead/San Gabriel	2,196,052	2.3%	2.3%	2.8%	4,780	3,715	15,543	$1.21
South El Monte	11,360,522	2.8%	3.3%	3.5%	98,178	58,332	71,543	$1.50
Walnut	7,166,275	4.3%	4.4%	6.3%	-36,661	-45,716	13,305	$1.27
San Gabriel Valley	176,088,959	4.5%	5.3%	6.5%	721,958	-456,045	1,485,799	$1.41

Los Angeles Industrial Submarket Statistics 2Q 2026 — South Bay: includes Carson, Compton, El Segundo, Gardena, Harbor City, Hawthorne, Inglewood, Lakewood/Hawaiian Gardens, Lawndale, Long Beach/Terminal Island, Lynwood, Rancho Dominguez/E Rancho Dominguez, Redondo/Hermosa Beach, San Pedro, Signal Hill, Torrance, Wilmington
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	Total Availability Rate	2Q26 Direct Net Absorption (SF)	YTD Net Direct Absorption (SF)	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate (NNN)
Carson	35,950,155	6.4%	6.6%	6.4%	-8,713	-629,686	489,277	$1.50
Compton	25,370,483	10.0%	11.5%	14.0%	-537,350	-479,374	306,754	$1.28
El Segundo	8,080,792	3.9%	4.1%	4.5%	-14,741	-27,557	27,623	$2.18
Gardena	29,029,197	7.3%	7.3%	9.4%	-187,612	-265,597	155,583	$1.35
Harbor City	1,832,901	6.2%	6.2%	5.0%	90	-85,965	22,100	—
Hawthorne	8,715,654	1.9%	2.2%	3.4%	12,785	162,957	6,732	$1.76
Inglewood	4,780,385	1.9%	4.5%	5.3%	-4,819	-22,054	1,145	$1.86
Lakewood/Hawaiian Gardens	509,173	0.0%	0.0%	8.3%	0	5,199	0	$0.75
Lawndale	279,665	4.6%	4.6%	7.8%	1,050	-2,750	3,800	—
Long Beach/Terminal Island	25,031,518	9.8%	11.2%	10.4%	-50,488	-126,212	445,085	$1.47
Lynwood	4,071,971	2.1%	2.1%	3.2%	-27,804	-33,528	1,200	$1.15
Rancho Dominguez/E Rancho Dominguez	13,684,187	6.4%	8.1%	10.2%	19,385	338,700	39,089	$1.26
Redondo/Hermosa Beach	1,753,037	3.1%	3.1%	0.2%	-51,229	-54,429	51,229	—
San Pedro	2,782,567	13.2%	13.2%	13.9%	-1,455	-1,455	0	$1.97
Signal Hill	3,031,805	3.6%	5.1%	3.9%	18,828	-16,876	36,586	$1.37
Torrance	29,429,983	6.4%	7.8%	8.5%	357,261	-88,768	647,608	$1.69
Wilmington	4,092,970	5.8%	6.9%	8.0%	-157,289	-186,109	28,059	$1.27
South Bay	198,426,443	6.9%	7.8%	8.6%	-632,101	-1,513,504	2,261,870	$1.47

Los Angeles Industrial Market Total 2Q 2026 — combined totals for all submarkets
Submarket	Total Inventory (SF)	Direct Vacancy Rate	Total Vacancy Rate	Total Availability Rate	2Q26 Direct Net Absorption (SF)	YTD Net Direct Absorption (SF)	2Q26 Total Leasing Activity (SF)	Average Direct Rental Rate (NNN)
Los Angeles Total	755,546,775	6.0%	6.9%	8.2%	-863,475	-2,559,239	6,210,673	$1.37

Data as of 2Q 2026. Source: EDD, CoStar. Prepared by the Kidder Mathews Research Group.

Significant Sale Transactions 2Q 2026

Los Angeles Industrial Significant Sale Transactions 2Q 2026: property, submarket, SF, sale price, $/SF, buyer, seller
Property	Submarket	SF	Sale Price	$/SF	Buyer	Seller
Golden West Food	Central Los Angeles	238,457	$87,142,000	$365.44	New Mountain Capital	Golden West Food Group
The Danfoss Manufacturing Building	SGV	96,948	$43,333,500	$446.98	Blue Owl Capital	Eaton Corporation
Centron Industries Building	South Bay	146,765	$34,900,000	$237.80	Dermody	Rexford Industrial Realty, Inc.
5555 E Slauson Ave	Central Los Angeles	91,010	$34,129,000	$375.00	Holland Flower Market	BCI
3507 Jack Northrop Ave	South Bay	40,553	$32,500,000	$801.42	Olive Point Capital	Jofa Capital, LLC
Pacific Gateway Industrial Park	South Bay	98,659	$31,100,000	$315.23	Lift Partners	Terreno Realty

Significant Lease Transactions 2Q 2026

Los Angeles Industrial Significant Lease Transactions 2Q 2026: property, submarket, SF, transaction date, landlord, tenant
Property	Submarket	SF	Transaction Date	Landlord	Tenant
Bridge Point South Bay	South Bay	512,490	May 2026	Morgan Stanley & Co.	Valar Atomics
Bridge Point Long Beach	South Bay	415,312	June 2026	Kurv Industrial	Divergent Technologies, Inc.
7400 E Slauson Ave	Central Los Angeles	283,621	April 2026	Prologis	Pixior LLC
Bldg 140	South Bay	200,892	April 2026	Watson Land Company	Undisclosed
Airgas	SGV	197,775	May 2026	Prudential	Undisclosed (Sublease)
20500 S Alameda St	South Bay	147,390	June 2026	CenterPoint Properties	Custom Goods

Significant Under Construction

Los Angeles Industrial Significant Under Construction 2Q 2026
Property	Address	Submarket	SF	Owner	Delivery
Commerce Gateway	7400 E Slauson Ave	Central Los Angeles	283,621	Prologis, Inc.	September 2026
LAX01 Vernon	3094 E Vernon Ave	Central Los Angeles	263,409	Goodman Group	June 2026
Mid Counties Distribution Ctr	12300 Lakeland Rd	Mid-Cities	185,056	Duke Realty Corporation	October 2026
Prologis Shoemaker Distribution Ctr	16323 Shoemaker Ave	Mid-Cities	160,837	Prologis, Inc.	February 2028
14940 Proctor Ave	14940 Proctor Ave	SGV	160,094	Rexford Industrial Realty, Inc.	July 2026
South Bay Logistics Center	1515 W 190th St	South Bay	143,688	The Ruth Group	December 2026