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Market Summary

• Demand Softening: Industrial demand continued to ease in Q3, with negative net absorption of -850,291 SF — the largest quarterly loss in 2025 and the 11th consecutive quarter of tenant contraction.
• Vacancy Surge: Countywide vacancy rose to 6.6%, the highest since the Great Recession (up from 1.8% over the past 11 quarters).
• Lease Rates Declining: Average NNN asking rate fell to $18.12 PSF (down from $19.20 PSF in Q3 2024).
• Tenant Concessions at Peak: Landlords offering maximum incentives to attract tenants.
• Bright Spot: Increased activity in 100,000–200,000 SF distribution & manufacturing spaces.

Key Market Indicators (Q3 2025 vs Prior Quarters)

Top Lease Transactions (by SF)

Top Sale Transactions (by SF)

Outlook

• Rising vacancy and falling rents signal a tenant-favorable market.
• Sales activity remains resilient, with average sale prices up 10% YoY despite higher cap rates.
• Construction pipeline cooling (down ~24% from Q2), potentially stabilizing supply in 2026.

Source: Lee & Associates Research, CoStar, U.S. Bureau of Labor Statistics | © 2025

Q3 2025 San Gabriel Valley (SGV), CA Industrial Market Summary

Market Recovery Signs

• Vacancy Rate: Down to 5.3% (from 6.4% in Q3 2024), with YTD improvement to 5.4% from 6.2% in 2024.
• Net Absorption: Strong rebound with +1.56M SF YTD; 12-month total at +2.12M SF (vs. -1.78M SF in Q3 2024).
• Leasing Activity: Robust at ~9M SF across 539 deals, indicating tenant re-entry despite elevated availability (~6.4%).

Rents & Pricing Trends

• Avg NNN Asking Rent: $1.29 PSF, down from $1.49 PSF (Q3 2024) — reflecting landlord competition.
• Sale Price PSF: $240.24, down from $285.03 in Q2 2025.
• Cap Rate: Compressed to 4.8% (from 6.1% in Q3 2024), signaling rising investor confidence.

Supply & Development

• Under Construction: 617K SF — limited pipeline, new deliveries slowed significantly.
• Total Inventory: 177.75M SF, stable with minimal additions.

Top Lease Transactions (by SF)

Top Sale Transactions (Portfolio Deal by TA Realty)

Outlook: SGV industrial market is stabilizing with improving fundamentals, strong leasing, and moderating rents. Low construction and positive absorption support a tenant-favorable but recovering environment.Source: Lee & Associates Research, Q3 2025

Industrial Warehouse

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Overview

The "Industrial Market Insights Q3 2025" report by Lee & Associates analyzes the Southern California industrial real estate market, focusing on the South Bay, Midcounties, Central, and Inland Empire submarkets. It highlights macroeconomic drivers, trade trends, port activity, and submarket-specific fundamentals like vacancy rates, net absorption, rents, construction, and top transactions. Overall, the market shows softening conditions with rising vacancies, declining rents in some areas, and stabilizing investor activity amid economic moderation. Ports of Los Angeles (LA) and Long Beach (LB) remain dominant U.S. trade gateways, though competition from East/Gulf Coast ports intensifies.

Macroeconomic Drivers

• GDP: Real GDP grew 3.8% annualized in Q2 2025, rebounding from a 0.6% Q1 decline, driven by consumer spending and reduced imports. Q3 growth is projected at ~3%.
• Employment: Unemployment rose to 4.3% in August, with only 22,000 jobs added (downward revisions to prior months). Wage growth of 3.7% year-over-year supports consumer spending.
• Retail & E-Commerce Sales: E-commerce sales hit $304.2B in Q2 (up 1.4% QoQ, 5.3% YoY), representing 16.3% of total retail sales ($1.87T, up 0.4% QoQ, 3.9% YoY).
• Trade Partners: Mexico leads U.S. trade at 21%, followed by Canada (17%) and China (10%). Top 15 partners account for 74.2% of activity.
• Year-End Outlook: GDP growth ~2.6% annualized in Q4, with stable consumer spending despite labor cooling and a government shutdown. Moderate expansion and cooling inflation bode well for 2026 commercial real estate.

Port Activity

LA and LB ports handled ~41% of U.S. imports by TEU market share. West Coast ports lead in throughput, but East/Gulf ports (e.g., NY/NJ, Houston) are gaining.

Submarket Summaries

South Bay

• Fundamentals: Vacancy rose to 6.9% (from 6.3% in Q2). Net absorption negative at (757,229) SF. Deliveries: 429,112 SF. Under construction: 244,786 SF.
• Rents & Sales: Average NNN rent fell to $1.48/SF (down 8.5% YoY). Building sales averaged $291/SF (cap rate 6.4%).
• Market Trends: Softening conditions with higher availability (9.5%); tenant-favorable market. Investment slowed (13 deals, $75.4M volume).
• Top Leases (all new): 19801 S Santa Fe Ave (356,642 SF, Confidential); 901 E 233rd St (221,050 SF, Custom Goods); 20846 Normandie Ave (203,877 SF, Hadrian Inc).
• Top Sales: 3700-3730 Redondo Beach Blvd (99,377 SF, $35.5M, Investment); 2959 E Victoria St (54,500 SF, $23M, Owner-User).

Midcounties

• Fundamentals: Vacancy fell to 7.3% (from 8.0% in Q2). Net absorption positive at 678,807 SF. Deliveries: 0 SF. Under construction: 493,874 SF.
• Rents & Sales: Average NNN rent at $1.30/SF (down 16% YoY). Building sales averaged $259/SF (cap rate ~5.0%).
• Market Trends: Stabilizing with lower direct vacancy; availability at 9.8%. Investment slowed (17 deals, $148.2M volume).
• Top Leases: 15614-15700 Shoemaker Ave (521,091 SF, Breakthru Beverage CA, New); 8201 Sorensen Ave (234,330 SF, Rove Concepts, Renewal).
• Top Sales: 6259 Descanso Ave (54,000 SF, $17.4M, Owner-User); 14390 Marquardt Ave (31,308 SF, $17M, Owner-User).

Central

• Fundamentals: Vacancy rose to 7.1% (from 6.8% in Q2). Net absorption negative at (465,078) SF. Deliveries: 157,715 SF. Under construction: 749,742 SF.
• Rents & Sales: Average NNN rent steady at $1.41/SF. Building sales averaged $295/SF.
• Market Trends: Slight softening; availability at 8.5%, occupancy 92.9%. Steady sales (25 deals, $190.4M volume).
• Top Leases: 8500 Rex Rd (335,600 SF, Million Dollar Baby Classic, New); 4885 E 52nd Pl (210,347 SF, Uniuni, New).
• Top Sales: 4400 Pacific Blvd (253,200 SF, $48.8M, Investment); 7400 Bandini Blvd (94,937 SF, $38.5M, Owner-User).

Inland Empire

• Fundamentals: Vacancy rose to 8.9% (from 8.1% in Q2). Net absorption negative at (746,596) SF. Deliveries: 5,299,580 SF. Under construction: 6,036,579 SF.
• Rents & Sales: Average NNN rent up to $1.00/SF (from $0.98 in Q2, down 12% YoY). Building sales averaged $252/SF (cap rate 5.9%).
• Market Trends: Balancing with high availability (12.3%); occupancy ~91%. Investment surged (55 deals, $777.2M volume).
• Top Leases: 5690 Industrial Pky (844,311 SF, iDC Logistics, New); 13052 Jurupa Ave (827,578 SF, Elogistek, New).
• Top Sales: 11991 Landon Dr (765,456 SF, $208.76M, Investment); 22491 Harley Knox Blvd (348,375 SF, $90.6M, Investment).

The report emphasizes logistics and manufacturing as key industries in transactions, with a tenant-favorable shift prioritizing occupancy over rent growth. Data sourced from AIR CRE, CoStar, and internal databases.

*Source: Lee & Associates Q3 2025 North America Market Report

The report from Lee & Associates discusses the implications of the Federal Reserve's "higher for longer" interest rate policy on commercial real estate (CRE) investments in 2025. Following a modest 0.25% rate cut in September 2024, bringing the benchmark to 4.00%-4.25%, the Fed signals cautious easing amid persistent inflation (core at 3.1%, headline at 2.9%) and internal debates on neutral rates (ranging from 2.5% to 4%). This environment shifts CRE from momentum-driven to performance-based strategies, with elevated borrowing costs (often >6%) repricing risk, portfolios, and values. Key themes include structural rate pressures, refinancing crises, sector divergences, cap rate tensions, and adaptive investment approaches.

Key Challenges

• Persistent Rates and Inflation: Sticky inflation in housing and services keeps rates high, with 10-year Treasuries near 4%. Lenders demand stronger sponsorship, conservative leverage, and NOI stability, leading to tighter spreads and shorter terms. The recent cut offers short-term relief but minimal impact on long-term capital.
• Refinancing Risk: $1.5 trillion in CRE loans mature by end-2025, prompting short-term extensions. Properties from peak eras face shortfalls, especially in office and multifamily sectors. Markets like Dallas, Atlanta, and Phoenix see stretched debt-service ratios, forcing sales, payoffs, or defaults.

Sector-Specific Impacts

• Office: Undergoing restructuring with vacancies >20% in cities like Denver, Chicago, and San Francisco (especially Class B/C). Flight-to-quality persists, but even premium assets face tenant risks. Conversions to lab/residential/flex space rise, with trades at 30-70% discounts from peaks.
• Multifamily: Favored but divergent—urban cores (e.g., New York, Boston, LA) stabilize with low vacancies; Sun Belt oversupply (e.g., Austin, Raleigh) leads to concessions and 10%+ vacancies. High costs, rent caps (e.g., Washington's ~9.7% in 2026), and extended lease-ups complicate deals. Private buyers target below-replacement-value assets.
• Industrial: Remains strong but cooled, with national vacancy at 7.4%. Big-box absorption slows in Phoenix and Chicago, but infill/last-mile/flex/cold storage thrives in constrained markets due to tenant retention and limited supply.
• Retail: Resilient with 4.3% national vacancy. Grocery-anchored and experiential assets outperform in Miami, Charlotte, and San Diego. Bifurcation exists: outdated centers in tertiary markets soften, while cash-flowing properties attract private capital.

Cap Rates and Valuation

Cap rates appear stable nationally but mask a buyer-seller standoff—sellers cling to peak pricing, buyers factor in risks. Tension persists into late 2025, especially in multifamily and industrial, with repricing often subtle rather than overt yield shifts.

Investment Strategies for the New Normal

Investors shift from Fed-pivot anticipation to disciplined execution:

• Prioritize In-Place Cash Flow: Stabilized income hedges against costs and dislocations.
• Operational Execution: Focus on leasing, expense control, and targeted repositioning over major capex.
• Underwrite Exits Upfront: Deals must stand alone, assuming full-cycle ownership.
• Creative Financing: Use seller carrybacks, preferred equity, and hybrids to bridge gaps.
• Value-Add Focus: Target assets with fixable issues (e.g., leasing friction) without overcapitalizing.

Conclusion

The report emphasizes CRE's maturation in a rate-sensitive era, rewarding pragmatism and local insight. The Fed's cut boosts confidence modestly, but elevated rates are the baseline—opportunities lie in fundamentals, not speculation. Insights from Lee professionals highlight fragmentation and selectivity.

BUILDING SIZE: ±18,000SF

LOT SIZE: ± 36,000 SF Lot Land

ZONING: LA Unincorporated M2

• Free Standing Industrial Building

• Fenced/Paved Yard area

• No City Business Tax

• 3 Ground Level Doors/4 Bathrooms

• Solar Lighting

• Bonus Unfinished Mezzanine

• Dock High Possible

• Glass Kiln/Oven

• Close to 110, 405, 91 and 105 Freeways

Available : ±1,800 – ±6,600 

Lot Size: ±40,847 SF of Land

Zoning: C-P (PCD)

APN: 8447-031-038

Park-like setting: The building is situated in a serene environment with beautiful views of the park.

Ample parking: Large lot with ±28 Parking Spaces

Next to 10 Freeway with close access to 57, 71, 210 & 60 Freeway

AVAILABLE: ±27,750 SF Bldg on ±77,145 SF Lot

SALE PRICE: Negotiable

LEASE RATE: Negotiable

OPEX: $0.16 / SF

APN#: 7102-020-001

ZONING: M2

• Owner Motivated - Submit Your Offer Now!

• Large Fenced and Paved Gated Yard

• Abundant Parking – 56 spaces

• Two (2) Dock High Loading Doors

• Free Standing Building

• High Visibility

• Close to 91 & 710 Freeways

Available: ±182,746 SF / ±4.2 acres of 

LandSale Price: $9,685,538.00/ $53.00 PSF

Lease Rate: $70,000.00 Net per month

Zoning: Commercial Automotive

APNs: 7315-012-002, & 7315-012-804

• Carson Auto Row

• Close to SCE Hinson Substation

• Potential EV Charging Station

• Low Business License Fees & Utility Taxes

• Freeway Visibility: ±310,000 Average DailyVolume

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PROPERTY HIGHLIGHTS

Sold Suite Suite 18-C

Total Area Sold ± 3,444 SF

• Brand New Construction

• 28’ High Clearance

• M1 Zoning

• Highly Desirable Business Park Setting

• Great Inland Empire West Location

• Close to 10, 71 & 60 Freeways

• Demand for industrial space declined for the tenth consecutive quarter in Q2 2025.
• Vacancy rate increased to 6.1%, up from a record low of 1.8% in late 2022.
• Higher vacancy rates have led to improved market conditions for tenants, with rental rates dropping over 10% from their recent peak.
• Reduced demand is primarily driven by concerns over tariff impacts, contributing to decreased cargo volumes at the Los Angeles port complex.
• Year-over-year container traffic in May 2025 fell by 5% at the Port of Los Angeles and by 8.2% at the Port of Long Beach.
• Rising vacancies are fostering a more balanced industrial market.
• The overall vacancy rate reached 6.1% at the end of June 2025, the highest since 2012.