Southern California Industrial Saw Boost, May See Bust From Tariff Turmoil

Following a bump in leasing in the first three months of the year, preliminary numbers indicate that Southern California industrial leasing in April and May slowed as tariff uncertainty squeezed occupiers. 

Imports were above the five-year average for the last 11 months ending in April, according to a JLL report published in early June about the ports and industrial leasing. But the April announcement of reciprocal tariffs set off uncertainty and sent many occupiers scrambling for solutions and workarounds. 

“What we have seen from the month of April and May for our industrial leasing is a slowdown, and I think that coincides with just a lot of people pausing as they were surprised” by reciprocal tariffs, JLL Senior Director of Research for Southern California David Fan said, citing unofficial SoCal numbers because the second quarter isn't yet complete. 

The bump from that last-minute rush to get goods into the U.S. ahead of tariffs brought some potentially long-term benefits. New industrial leasing in Los Angeles, the Inland Empire, Orange County and San Diego County hit a four-year high of 25M SF in the first quarter, “tracing increased throughput at LA/[Long Beach ports] since 2023,” according to the report. 

The average new lease term on industrial space grew from 71 months to 74 months as occupiers continued to lock down long-term space in Southern California, according to the report. 

Fan said an increase in port volume correlates “quite well, but not perfect” with leasing volume. 

“Two-thirds of the time, that demand for warehouse space will come through,” Fan said. 

Leasing activities for SoCal industrial space — and their growth at the beginning of the year — correlated closely with port volumes for imports, the report says. 

Fan said he anticipates that with the rush to bring goods into the country, there could be a drop-off in inbound cargo in the coming months.

If retailers are trying to hedge around future trade policy by getting things in earlier than normal, then there may be less of a need for a high volume of shipments after that, Fan said. That would potentially signal a good chance of falling leasing numbers. 

The import drop-off may already be here. In a briefing on June 13, Port of Los Angeles Executive Director Gene Seroka said that May’s import volumes declined 9% year-over-year and 19% compared to April. 

Projections from the National Retail Federation echoed a similar trend across the country, according to Ben Hackett, founder of Hackett Associates, which partnered with NRF on a forecast report on tariff impacts.

“However, tariff reductions will lead to a surge in imports in June through August as importers take advantage of the various 90-day pauses,” Hackett said. “The peak for the winter holidays will come early this year, making it simultaneous with the peak for the back-to-school season.”

If higher tariffs aren't delayed again, the NRF anticipates the return of declining volumes of imports in the final four months of the year. 

It remains to be seen how that will shake out for one of the top port complexes in the nation, but Fan said he is optimistic and takes a long view of the market. 

“We are impacted by trade, but we can also be a resilient market,” Fan said. “We are not going to have zero TEUs, because as long as our households are here and they continue to shop, there's a kind of a base of demand for imports and for consumptions and for warehouse need.”