- Southern California’s industrial market saw a Q1 leasing high of 25M SF, but activity slowed in April and May amid trade policy uncertainty.
- The dip follows the announcement of new reciprocal tariffs, which prompted occupiers to front-load shipments earlier in the year.
- Port of LA import volumes declined 9% YoY in May, and leasing activity may fall further if import levels continue to drop.
- Despite the slowdown, long-term optimism remains as baseline demand for warehouse space is supported by ongoing consumer activity.
A Strong Start Fades
Southern California’s industrial sector kicked off 2025 with momentum, as reported by Bisnow. Leasing activity reached its highest quarterly total in four years, reflecting strong early-year demand. A total of 25M SF was leased across Los Angeles, the Inland Empire, Orange County, and San Diego, driven by strong import activity at the region’s ports.
Tariff Jitters Stall Momentum
That momentum slowed heading into Q2. According to JLL’s David Fan, April and May saw industrial leasing activity cool significantly as reciprocal tariff announcements spooked occupiers. “A lot of people paused as they were surprised by the tariffs,” Fan said, referencing still-unofficial data for the quarter.
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Rushing Before The Risk
The Q1 industrial leasing surge coincided with a strategic rush by occupiers to secure goods ahead of anticipated trade policy changes. This led to heightened throughput at ports and longer average lease terms, rising from 71 to 74 months, as tenants looked to lock in space amid uncertainty.
Import Drop May Be Early Warning
Signs of an import slowdown are already materializing. Port of LA Executive Director Gene Seroka reported a 9% year-over-year drop in imports in May, and a 19% drop from April. Forecasts from the National Retail Federation and Hackett Associates anticipate an early import peak from June through August—followed by a potential decline if higher tariffs kick in during Q4.
Outlook Remains Cautiously Optimistic
Despite short-term headwinds, analysts say the fundamentals of Southern California’s industrial market remain solid. “We’re not going to have zero TEUs,” said Fan, referencing container volumes. “As long as households are here and shopping, there will be base-level demand for imports and warehouse space.”
Why It Matters
Global trade flows drive Southern California’s industrial sector and industrial leasing, with the ports of Los Angeles and Long Beach playing a key role. Tariff policies and shifting import patterns directly impact demand for logistics and warehouse space—making this a bellwether region for national industrial trends.
What’s Next
With the market facing near-term volatility, all eyes are on tariff negotiations and import volumes. If importers front-load shipments, industrial leasing may slow later in the year before stabilizing as trade policies normalize.
