Southern California Industrial Real Estate Market Shows Stabilization as CBRE Forecasts 5% Leasing Rise

The Southern California industrial real estate market entered 2026 with renewed optimism as vacancy rates stabilized across five major markets and national forecasts predict increased leasing activity, according to a market analysis released by Voit Real Estate Services.

CBRE forecasts a 5% year-over-year increase in industrial leasing activity in its 2026 national Industrial Outlook, with lease renewals accounting for more than 35% of total volume, well above the historical average of 24%. The projected growth comes as the industrial real estate sector adjusts to shifting trade policies and slower economic growth.

Southern California Industrial Markets Show Positive Absorption

The Southern California industrial real estate market showed encouraging signs in the fourth quarter, with positive absorption in all but one of the five markets tracked by Voit Real Estate Services, including Los Angeles, San Diego, Orange County, Mid Counties, and the Inland Empire. Los Angeles was the outlier for the quarter, though its vacancy rate remained relatively flat, decreasing by 2% from the fourth quarter of 2024.

According to Voit Real Estate Services' fourth quarter 2025 industrial market reports for Southern California markets, vacancy rates are virtually flat or up year over year across all five markets.

Port Activity Supports Warehouse Real Estate Demand

The Port of Long Beach reported its busiest year in its 115-year history in 2025, processing 9.9 million twenty-foot equivalent units (TEUs), according to SupplyChainBrain. The port expects to handle 9 million TEUs in 2026. The Port of Los Angeles also reported strong performance, moving approximately 9.5 million TEUs in calendar 2025, up about 2% versus 2024 and well above pre-pandemic 2019 levels.

National Industrial Real Estate Development Trends

A decrease in speculative construction of industrial facilities will stabilize vacancy rates, according to CBRE's outlook. Landlords with older industrial space will offer more incentives for early lease renewals as tenants pursue a flight to quality, including much of the speculative space built during the post-COVID building boom.

Cushman & Wakefield's U.S. Industrial MarketBeat for the fourth quarter of 2025 reported that tenant demand strengthened in the second half of the year despite trade uncertainty, with the national industrial vacancy rate holding steady at 7.1%.

Rent growth will remain subdued as the industrial real estate sector adjusts to shifting trade policies and slower economic growth. Much of the new leasing activity will be driven by sustained demand for modern logistics, e-commerce, and manufacturing facilities, according to CBRE's forecast.

Sources

Voit Real Estate Services: https://voitco.com/promising-signs-emerging-in-socal-industrial-market/