- Aerospace and defense tenants are driving demand in Los Angeles industrial hubs.
- Tenants prioritize high power capacity, clear heights, and parking, often favoring older buildings.
- Limited supply is fueling competition, with some companies compromising on Class-A space for location and features.
- New construction is emerging to serve specialized aerospace and defense needs, especially near Long Beach Airport.
Aerospace and Defense Tenants Expand Footprints
According to Bisnow, aerospace and defense firms are driving strong industrial leasing activity across Los Angeles. Companies like FlightWave Aerospace Systems are signing major leases in established aerospace hubs. These hubs include the South Bay, Santa Clarita Valley, and areas near Long Beach Airport.
Strong defense spending and venture capital are fueling this demand. In 2025, aerospace and defense firms captured 34% of Los Angeles’ $12B in venture funding.
What Tenants Want
Aerospace and defense occupiers typically require more power, higher clear heights, and stronger security than traditional industrial tenants. Older buildings, often built for earlier manufacturing waves, provide higher parking ratios and stronger electrical capacity. For example, FlightWave recently upgraded to a 51 KSF facility in Torrance. Meanwhile, another defense tenant expanded its Valencia footprint to 300 KSF, including an 80 KSF lease driven by power needs and parking availability. This demand reflects a broader surge in defense startups seeking specialized, secure industrial space as they scale operations.
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Tight Supply, Rising Competition
Available industrial flex space remains scarce in desirable submarkets. Intense competition has forced some aerospace and defense tenants to consider second-tier or non-Class-A buildings if they meet technical requirements and are well-located. Brokers note this trend has pushed occupiers to act quickly and sometimes compromise to secure suitable space.
New Construction for Specialized Needs
Where existing buildings fall short, new development is filling the gap. The Long Beach Airport area—formerly dominated by legacy defense manufacturers—is now the site of large-scale build-to-suit projects. Notably, Sares Regis Group secured a $1B, 1 MSF lease with defense tech firm Anduril in early 2026. As of mid-2026, inventory around the airport has been entirely absorbed, marking a rapid shift from surplus to shortage in less than a year.
