Fresh Maps for SoCal Industrial Market Drop
Voit Real Estate Services just released its updated Q4 2025 maps for Southern California's industrial market. The data provides a granular look at land pricing, lease rates, and drayage costs across key submarkets in the LA Basin and Inland Empire — a key tool for benchmarking properties and negotiations.
The Southern California industrial market is undergoing a significant recalibration as of Q4 2025. After years of relentless growth, the region is seeing a market in transition, characterized by softening rents and rising vacancies, bringing a better balance between landlords and tenants. Landlords are increasingly offering concessions like improvement allowances and rent-free periods to secure deals. In the Inland Empire, the overall vacancy rate climbed to 8.1% in the fourth quarter, a significant increase from the 10-year annual average of 4.0%. This rise was accompanied by negative net absorption of 1.5 million square feet. Average asking rents have felt the pressure, dropping 11.6% year-over-year to $1.13 per square foot per month. The development pipeline in the Inland Empire has slowed to a crawl, with construction activity hitting a 15-year low. Only 2.4 million square feet was under construction at the end of 2025, a stark contrast to the nearly 40 million square feet underway at the market's peak in 2022. This dramatic construction slowdown is expected to help rebalance the market over the next 12 to 18 months. The Los Angeles market is also softening, with the overall vacancy rate hitting 4.6%, the highest level recorded in the past decade. Average asking rents ended the year at approximately $1.43 PSF, a 4.0% decline year-over-year. While some reports noted a return to positive absorption for the quarter, others showed significant negative absorption, indicating a volatile and submarket-dependent environment. Despite the cooling market, leasing activity in Los Angeles for the full year 2025 reached its highest point since 2021, with 33.3 million square feet leased. However, quarterly leasing volume saw a sharp 60% year-over-year decline, highlighting the more recent slowdown. Key tenant sectors driving demand across Southern California include third-party logistics (3PLs), which dominated 35% of leasing, along with advanced manufacturing and e-commerce retailers. This market shift is happening as the San Pedro Bay ports experience a dip in cargo volumes. Both the Port of Los Angeles and the Port of Long Beach reported year-over-year declines in container traffic in late 2025. Trade policy uncertainty and the threat of tariffs are expected to create continued headwinds for import volumes into early 2026.
