LA County industrial vacancy dips to 5.0%
Los Angeles industrial vacancy fell to 5.0% in Q2 2026 as net absorption turned positive for a third straight quarter, though asking rents are down 7% year over year.
What's happening
Los Angeles County industrial vacancy fell 22 basis points in Q2 2026 to 5.0%, according to CBRE. Net absorption was positive for the third consecutive quarter, a sign that occupiers are adding space again after two years of consolidation.
Pricing remains the soft spot. Asking rents fell 2.5% from Q1 and 7.0% from a year earlier, and are down 32.4% over 36 months from the 2022 peak. Leasing activity was a bright spot in the quarter, led by three large transactions totaling 1.3 million sq. ft. Those deals show that big occupiers are again willing to commit to long-term space in the county's infill submarkets, where land for new buildings is scarce.
- Vacancy: 5.0%, down 22 bps quarter over quarter
- Asking rents: -2.5% QoQ, -7.0% YoY, -32.4% over 36 months
- Absorption: Positive for a third consecutive quarter
- Large deals: Three transactions totaling 1.3M SF led Q2 leasing
What it means for owners, tenants and investors
LA remains one of the tightest large industrial markets in the country, and the direction of vacancy has turned. Tenants with 2027 and 2028 expirations still have leverage on rate, but that leverage is based on rents that have already reset, not on rising availability.
For owners, stabilizing occupancy supports values even as rent growth stays negative. Buyers underwriting infill LA product are increasingly pricing in a floor rather than further declines. Tenants facing renewals should benchmark against current market rates, which are well below the rents many signed in 2021 and 2022. Owners carrying leases that reset in the next two years should plan for rent roll-downs, even as occupancy improves. Investors weighing acquisitions can use the 32.4% decline over 36 months as context: much of the correction has already happened.
What to watch
Whether the rent decline flattens in the second half of 2026; a quarter of flat asking rents would signal the bottom of this cycle. Large-block leasing, like the three deals totaling 1.3 million sq. ft. in Q2, is the other early signal to track.
Photo: Mathias Reding / Unsplash.
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