Industrial Rent Analysis

Industrial rents in Los Angeles have dropped significantly since mid-2023, driven by declining demand and higher vacancy rates. Asking rents are now about 17% lower than their peak. Lease concessions, which were rare just a few years ago, are becoming common. Some landlords are even offering four to five months of free rent on a five-year lease. Depending on factors like the type, size, age, and location of the building, effective rents are reported to be down as much as 25%.

Looking ahead, rents are expected to bounce back in 2025. A combination of stronger demand and fewer new buildings coming to market will likely help stabilize vacancies and push rents higher.

Logistics buildings, which saw rents rise faster than specialized or flex spaces, are now experiencing steeper declines. Even though tenants have more options and better bargaining power as rents cool, many are still facing significant rent increases when their leases expire. Asking rents are still over 30% higher than five years ago and have doubled over the past decade.

Geographically, Central Los Angeles and Vernon have seen the biggest drops, with rents falling more than 25% from their 2023 peak. Other major submarkets in the L.A. area have experienced declines of 20% to 25%. In South Bay, near the ports of Long Beach and Carson, asking rents have dropped from nearly $2 per square foot per month to between $1.50 and $1.75.

Submarkets farther from the ports, like the San Fernando Valley, San Gabriel Valley, and the Westside, have seen more moderate declines. Newer buildings in areas like the City of Industry and the upper San Gabriel Valley have helped prevent sharper drops in those regions, as they tend to command a premium over older properties.

Despite the broader softening of market rents and more options for tenants, many occupiers are still grappling with significant rent hikes when renewing leases. Even after the recent declines, market rates remain more than 30% higher than they were five years ago.

Source: CoStar Research