LA posts record industrial vacancy

Los Angeles’ industrial vacancy rate climbed to 7.3% in the first quarter of 2026, the highest level Savills has recorded for the market. (savills.us) Savills said vacancy rose 20 basis points from the fourth quarter and 70 basis points from a year earlier after 632,511 square feet of negative net absorption in Q1. The biggest move-outs were Freight Horse Logistics in Torrance at 370,600 square feet, Leopard Transnational in El Monte at 363,414 square feet, and Lakeshore in Long Beach at 228,000 square feet. (savills.us) Other brokerages are also showing a softer market, though they use wider geographies and different definitions. Colliers put Greater Los Angeles industrial vacancy at 5.9% in Q1, up 20 basis points quarter over quarter, with 28.0 million square feet of gross activity and asking rents down 31% from their Q2 2023 peak. (colliers.com) That gap in vacancy figures comes from market boundaries as much as market conditions. Savills’ Los Angeles report covers the tighter infill basin, while Colliers’ “Greater Los Angeles” report includes Orange County and the Inland Empire, where Q1 demand was mixed and Los Angeles County posted 1.1 million square feet of positive absorption. (savills.us) (colliers.com) The shift is a reversal from the pandemic-era shortage, when import surges and e-commerce demand left tenants bidding for scarce warehouse space near the ports. By early 2026, more empty blocks and eleven straight quarters of rent declines had started to give tenants more room to negotiate on price and concessions. (portoflosangeles.org) (colliers.com) That softer leasing backdrop has developed even with cargo volumes staying high. The Port of Los Angeles handled 10.24 million twenty-foot equivalent units in calendar 2025, while the Port of Long Beach reported a record 9.9 million units for the year, showing that warehouse demand has weakened relative to throughput rather than collapsed outright. (portoflosangeles.org) (supplychainbrain.com) The pressure is not uniform across the basin. Savills said vacancy is highest in buildings larger than 300,000 square feet, and most of Q1’s negative absorption came from the San Gabriel Valley, San Fernando Valley, and Central Los Angeles submarkets. (savills.us) Some landlords and brokers are starting to argue the market is closer to a floor than a fresh downturn. CBRE said Los Angeles remained in a “correction cycle” in Q1 2026 but showed early signs of stabilization, and Cushman & Wakefield said vacancy stayed elevated while showing similar signs at the start of 2026. (cbre.com) (cushmanwakefield.com) For now, the headline is simple: more warehouse space is sitting empty in Los Angeles than at any point in this cycle, and tenants shopping larger blocks have more leverage than they did two years ago. (savills.us)