L.A. industrial vacancy falls to 5% on fourth straight quarter of absorption

Los Angeles County industrial tenants absorbed 1.9 million square feet in the third quarter, the market’s fourth consecutive quarter of positive net absorption, according to the CBRE figures Commercial Observer reported on Oct. 16. Countywide vacancy fell 20 basis points from both the second quarter and a year earlier to 5 percent, the first annual decline in at least two years.

The same quarter a year earlier ran negative 2.4 million square feet. Year-to-date absorption stands at 5.1 million square feet, following more than two years of quarterly losses between mid-2023 and late 2025.

Average industrial asking rents held steady at $1.19 per square foot per month on a triple-net basis after declines in 10 of the previous 11 quarters. Rents remain 4 percent below the year-earlier average and 30.4 percent below the $1.71 per square foot recorded in the third quarter of 2023, so the recovery so far is occupancy, not price.

Buildings of at least 250,000 square feet accounted for almost 2.1 million square feet of third-quarter absorption and about 96 percent of all space absorbed this year. Buildings smaller than 50,000 square feet recorded negative absorption of 320,000 square feet in the quarter and 1.43 million square feet through September, leaving the county’s occupancy gains concentrated in large buildings.

Leasing activity reached 13.7 million square feet, up 6.5 percent year over year but down 15.7 percent from the second quarter. Central L.A. led the county with 1.11 million square feet of positive absorption, ahead of the South Bay at 488,000 and the San Gabriel Valley at 442,000. The Greater San Fernando Valley was the only submarket in negative territory, at 238,000 square feet, while the South Bay remained the most active leasing market with 4.46 million square feet of transactions.

On the supply side, 717,000 square feet of construction was completed in the quarter, down 38.1 percent from a year earlier. The pipeline grew 11.3 percent from the second quarter to 4.48 million square feet, its first quarterly expansion since early 2025, and another 1.42 million square feet of speculative projects is scheduled to deliver in the fourth quarter, which could test whether the occupancy gains hold.