Industrial demand has held steady as port container volume through August has increased compared to 2025
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Higher interest rates, increased gas prices and stagnating wage growth have caused uncertainty that the industrial market will strengthen in the near future, despite volume staying steady through Southern California’s major ports.
The Port of Long Beach had its busiest month in its 115-year history by moving nearly 1 million container units in September, as high diesel costs, Panama Canal access restrictions and a possible new U.S.-China trade deal fueled by the port’s inclusion in shippers’ cost-saving strategies.
It handled a record-setting 997,177 twenty-foot-equivalent units last month, eclipsing the previous record of 987,191 TEUs in October 2024, according to Noel Hacegaba, chief executive of the Port of Long Beach. Longshore workers and terminal operators in Long Beach processed 25% more cargo compared with September 2025.
“Shippers continue to lean on the Port of Long Beach as a reliable partner in their business strategies, leading to our historic month for cargo,” Hacegaba said in a statement. “Every milestone brings us closer to achieving our long-term goal of doubling cargo volumes to 20 million TEUs annually by 2050.”
Hacegaba also highlighted an incentive program to help keep cargo moving during the planned closure of the Vincent Thomas Bridge in the Port of Los Angeles for a 16-month deck replacement project. The program will offer additional gates at Long Beach container terminals on evenings and Saturdays to offer additional flexibility and terminal access to customers.
South Bay’s industrial asking rates continued to increase, led by demand from logistics users mixed with defense technology, advanced manufacturing and space/satellite companies. Notable industrial deals included Castelion, EnduroSat and Starpath Robotics, with some leases reportedly signed at $3 per square foot per month on a triple net basis, which represents a new high point for the area. Limited availability from new construction has intensified competition for space.
International Cargo Terminals signed the largest lease of the quarter for 339,000 square feet from landlord BlackRock Inc. at the Port of Los Angeles Distribution Center in San Pedro. Newmark represented the tenant on the 10-year deal.
As a result of strong demand in the South Bay, demand for Class B buildings in other submarkets from cost-conscious logistics companies and consumer goods firms has increased.
LOS ANGELES COUNTY
The Los Angeles office market vacancy rate increased to 23.2% as occupancy losses brought the year-to-date total to negative 877,000 square feet. Century City led all submarkets with 296,000 square feet of leasing, highlighted by PwC’s new 138,217-square-foot lease at 2121 Avenue of the Stars, relocating from Downtown L.A. In El Segundo, Innocean USA signed a new 101,000-square-foot lease at 888 Douglas Street, expanding into space previously occupied by Beyond Meat.
On the industrial side, net absorption turned negative for the first time since Q3 2024, totaling negative 1.5 million square feet. The overall vacancy rate rose 30 basis points to 4.3% but remained below the year-ago level. Leasing activity decreased on a quarterly basis to 7.6 million square feet, although cumulative activity through the first three quarters remained the strongest since 2021. The average asking rate increased for the first time since Q2 2023, rising to $1.33 per square foot per month on a triple net basis. After rapid growth during the pandemic era, asking rents declined for 10 consecutive quarters before stabilizing in Q2 2026.
LA County Office Market
LA County Industrial Market
ORANGE COUNTY
The overall market vacancy rate increased on a quarterly basis to 14.2%, well below the peak of 17.8% in Q1 2024. There was minimal change in the overall net absorption rate for the county, but the data broken down by property classification underscore the preference for higher-quality space. Class A properties absorbed 181,652 square feet while Class B properties had a 169,355-square-foot decline.
Despite a modest uptick in vacancy, the overall average asking rent rose to $2.93 per square foot per month on a full-service gross basis, its highest level since Q3 2021. Rents in the Greater Airport Area led gains, up 5% year over year to an average of $3.27 per square foot. Trophy assets command a premium, with asking rents ranging from $5.15 to $9.50 per square foot.
Office sales were led by Broadcom’s $325 million acquisition of the 660,900-square-foot campus at 15101-15191 Alton Parkway in Irvine Spectrum, which was the largest office transaction of the year to date. Other notable trades included homebuilder Taylor Morrison’s $68.7 million acquisition of Tustin Financial Plaza, which is slated for residential redevelopment.
OC Office Market
OC Industrial Market
INLAND EMPIRE
The overall industrial vacancy rate declined to 8% as net absorption rebounded, supported by tenant move-ins following increased leasing activity in the first half of the year. However, occupancy losses of 2.8 million square feet in the first half of the year limited year-to-date net absorption to 1.1 million square feet.
The availability rate continued to rise, reflecting more vacant and occupied space being marketed for lease. The availability rate reached 12.8%, with 83.6 million square feet available across the market. Eight new listings of 500,000 square feet or more contributed 6.3 million square feet to the increase. The overall average asking rent declined by to $1.01 per square foot. There is little pressure from new construction, which ticked up to 5.9 million square feet, far below the 2022 peak of 40.6 million square feet.
The office vacancy rate in the Inland Empire was little changed from the prior quarter. The region relies on government, professional services and healthcare. Affordability remains one of the IE’s strongest competitive advantages, particularly relative to Los Angeles and Orange County. Vacancy is expected to remain near current levels through the remainder of 2026.
IE Office Market
IE Industrial Market
SAN DIEGO
San Diego’s office vacancy rate decreased on a quarterly basis to 14.7% as net absorption totaled 259,000 square feet, with activity from several owner/user buyers, including Stanbridge University in Rancho Bernardo, Sweetwater Care in Carlsbad, Live Nation in Downtown, the Santa Fe Irrigation District in Solana Beach and First Citizens Bank in Del Mar Heights. New office leasing activity totaled 696,000 square feet, slightly below the quarterly average of 790,000 square feet since 2022. Economic uncertainty, evolving hybrid work strategies and inflationary pressures continue to influence decision-making.
Industrial leasing activity totaled 1.6 million square feet, which is above the five-year quarterly average of 1.3 million square feet. Year-to-date, manufacturing has been the most active sector, accounting for 29% of new leasing volume.
Construction activity remains concentrated in select submarkets, while the broader development pipeline faces continued pressure from financing costs, elevated vacancy and slower leasing velocity. Developers are increasingly phasing projects and evaluating tenant demand before moving forward with new construction.
SD Office Market
SD Industrial Market
Data provided by Cushman and Wakefield, a global commercial real estate services firm. The company tracks commercial real estate market activity including supply, demand and pricing trends.
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