SoCal Industrial Investment Picks Up Speed With $1.2B In Sales
Industrial landlords headed back to Southern California to end 2025.
Sales volume grew 6% annually in the fourth quarter to $1.2B, according to CBRE, indicating confidence among investors that the area will maintain its longstanding reputation as one of the country's best-performing industrial markets.
Clarity in the market fundamentals and debt liquidity and improving interest rates were the two main factors that combined to help Q4 figures begin to creep up, CBRE Senior Vice President Michael Longo said.
The buyers of today are very different from those of five years ago.
The majority of the capital available in the market is private. Those buyers would love to place cash on the West Coast, but it has been hard for them to find deals with the market on the downswing, Longo said.
"It's really hard to buy things where you can't project growth, but we're getting to a point where you can kind of call a bottom on the fundamentals," Longo said, adding that because of those changing conditions, he expects this capital to be much more active in the coming year.
Private buyers accounted for 63.8% of all industrial acquisitions in 2025, up from 46.1% in 2024. REITs represented just 7.7% of buyers, down from 24.7% the prior year, according to CBRE.
The industrial market was thrown into a tizzy during the pandemic years as demand for industrial space near the Ports of Los Angeles and Long Beach skyrocketed to levels that industrial experts now say was never sustainable.
A succession of challenges for LA-area industrial real estate, including the uncertainty stemming from tariffs and rising vacancy rates, slowed things down and made transactions difficult, Longo said.
"We're so port-focused, and we had the tariff shock to the system," Longo said. "We're still recovering from that increase in vacancy that we saw coming out of the pandemic. No other market had that."
The fourth quarter brought some large sales transactions, including Morgan Stanley's purchase of a 143K SF warehouse near Los Angeles International Airport at 5705 W. 98th St. for $211.4M, or approximately $1,480 per SF. Amazon occupies the entire warehouse, according to CoStar.
That was well above the quarterly average price per SF, which was $312, roughly the same compared to Q3 but up 3.3% from Q4 2024, according to CBRE.
The Inland Empire is also clawing its way back from the hangover of the post-pandemic years as well as trade-related hiccups. The market closed 2025 with a 7.1% vacancy rate, up 40 basis points from the previous quarter.
The Los Angeles industrial market faced some additional hurdles on the leasing front in the final months of 2025. The market's net absorption remained negative at 116K SF, but it was the lowest negative absorption the market posted in two years, according to CBRE. Net absorption in the area hasn't reached positive territory since the end of 2022.
Vacancy increased by 20 basis points over the previous quarter and 1% over the same period in 2024.
