- Los Angeles County industrial space posted its fourth straight quarter of positive absorption in Q3, with 1.9M SF absorbed and vacancy falling 20 basis points to 5%, per CBRE.
- Big buildings drove demand while small ones lagged: properties of 250,000 SF or more made up about 96% of absorption this year, and sub-50,000 SF buildings lost 1.43M SF.
- Asking rents held at $1.19 per SF, still 30.4% below the 2023 peak, and 1.42M SF of speculative deliveries due in Q4 could test the recovery.
Vacancy across Los Angeles County’s industrial market slipped to 5% in the third quarter, the first year-over-year decline in at least two years, according to a CBRE report covered by Commercial Observer.
Tenants took 1.9 million SF, compared with a 2.4 million SF loss a year earlier, giving the county a fourth consecutive quarter of positive net absorption.
Get Smarter about what matters in CRE
Stay ahead of trends in commercial real estate with CRE Daily – the free newsletter delivering everything you need to start your day in just 5-minutes
Recovery After Two Years of Losses
Commercial Observer reported that absorption has totaled 5.1 million SF this year, following a stretch of quarterly losses that began in mid-2023 and ran into late 2025. Vacancy is 20 basis points lower than both the prior quarter and a year ago.
Leasing reached 13.7 million SF, up 6.5% from a year earlier, though activity cooled 15.7% from the second quarter, per CBRE data cited by Commercial Observer.
Big Boxes Lead, Small Buildings Lag
Buildings of 250,000 SF or larger produced almost 2.1 million SF of absorption in the quarter and roughly 96% of this year’s total, Commercial Observer reported.
Small-bay space is the weak spot. Properties under 50,000 SF lost 320,000 SF of occupancy in Q3 and 1.43 million SF so far this year, per Commercial Observer.
Submarkets and Rents
Central L.A. posted the strongest absorption at 1.11 million SF, followed by the South Bay at 488,000 SF and the San Gabriel Valley at 442,000 SF, Commercial Observer reported. The Greater San Fernando Valley was the lone submarket in the red, losing 238,000 SF. The South Bay also remained the busiest leasing market, at 4.46 million SF.
Direct asking rents averaged $1.19 per SF monthly triple-net, flat after falling in 10 of the 11 quarters before. That is 4% below a year ago and 30.4% under the $1.71 peak of the third quarter of 2023, per CBRE.
Why It Matters
Flat rents after a long slide suggest the market may be nearing a floor, though the split between large and small buildings shows the recovery is uneven. Landlords with small-bay product still face softer demand, per Commercial Observer.
The turn contrasts with the national picture CRE Daily has covered, where industrial rents rise as the new-lease premium shrinks.
What’s Next
Completions fell 38.1% from a year ago to 717,000 SF, yet the construction pipeline grew to 4.48 million SF, up 11.3% quarter over quarter and the first quarterly increase since early 2025, Commercial Observer reported. Another 1.42 million SF of speculative space is due in the fourth quarter and could test the improvement.
