The boom times for LA warehouses appear to be fading. Rent increases have slowed – even dipped a bit – after climbing relentlessly. This change offers both hurdles but also chances for those who lease, buy, or already own property in this busy shipping hub.
Lately, Los Angeles turned into the place where everyone wanted warehouse space – thanks to online shopping, busy harbors, yet a lack of available property. From 2020 through 2023, rental costs shot up because businesses competed fiercely for locations close to the LA and Long Beach ports, frequently offering extra money simply to get their hands on some room. The economic downturn, coupled with stable customer purchases, means things are shifting in the real estate world. Reports show empty office spaces at a five-year high, alongside over ten million square feet now available for sublease – businesses are simply using less room.
Things are shifting favorably. Previously powerful landlords – they called the shots – now entice renters with deals like reduced prices, better leases, or even months of rent waived. If you need a warehouse – particularly if your business is smaller or medium-sized – now’s the moment to make a deal. Landlords are offering things they hadn’t for ages: leases that bend to your needs, money to help build out the space, moreover shorter agreements.
Rent is falling more in some places than others. Specifically, older buildings lacking modern features – think low ceilings, cramped delivery areas, or clunky loading docks – see the steepest declines. Demand persists for newer warehouses in places such as Industry, Vernon, yet even those see softening prices from 2022 peaks. Consequently, property owners must upgrade existing buildings or provide benefits to attract tenants.
A price drop might actually be good news for investing. Big firms that paused buying last year are coming back, seeking deals with potential for growth. Meanwhile, if you want a place to run your business, lower rents alongside easing sale costs could make purchasing a better choice than renting.
Things feel different at Industrial Advisors; rather than seeing this period as a setback, we consider it a fresh start following a stretch of rapid expansion. Currently, we support our customers in discovering overlooked real estate options alongside rental deals that provide both savings and practical benefits. Renters may snag favorable terms now, with options for more space down the road. Investors perhaps find an ideal moment to purchase, poised for when values climb again.
Southern California’s economic strength still hinges on industry in Los Angeles. Though lease rates are softening, key advantages – harbors, customers nearby, robust systems – haven’t diminished. While growth is slowing, chances exist for people able to find them, provided they move quickly.
Erik Larson