The San Gabriel Valley (SGV) industrial market showed signs of softening in the first quarter of 2026 after a period of steady improvement throughout 2025. For businesses, investors, and industrial real estate stakeholders in the greater Los Angeles area, understanding these shifts is critical for making informed decisions in one of Southern California’s key logistics and manufacturing hubs.
Despite the quarterly uptick in vacancy and negative absorption, the overall market remains relatively healthy compared to historical norms, with limited new supply coming online.
| Indicator | Q1 2026 | Q4 2025 | Q1 2025 | Change |
|---|---|---|---|---|
| 12-Mo. Net Absorption | (1,059,108) | (317,060) | 426,499 | Negative |
| Vacancy Rate | 6.00% | 4.50% | 5.80% | ↑ |
| Avg NNN Asking Rent PSF | $15.84 | $15.00 | $16.68 | ↑ QoQ |
| Sale Price PSF | $300.00 | $303.00 | $287.74 | Stable |
| Cap Rate | 5.20% | 5.20% | 6.10% | Stable |
| Under Construction SF | 310,295 | 529,985 | 493,874 | ↓ |
Source: Lee & Associates Q1 2026 Industrial Market Overview
The negative net absorption in the trailing 12 months indicates that more space became available than was leased during this period. This contributed to the vacancy increase from the very tight 4.5% level at year-end 2025. However, the quarter-over-quarter rise in asking rents suggests landlords are still holding firm on pricing in a competitive environment.Construction activity slowing to just over 310,000 square feet is encouraging. Reduced future deliveries should prevent a significant oversupply and help stabilize vacancy rates later in 2026.
Top Sales:
Top Leases:
These transactions demonstrate continued demand from logistics, courier, manufacturing, and specialized industrial users in core SGV submarkets like Industry, Azusa, and Irwindale.
While Q1 2026 reflected some cooling, the San Gabriel Valley remains a vital component of the broader Los Angeles industrial market. Its strategic location, access to major transportation corridors, and established industrial base continue to attract tenants and investors.Lower construction deliveries should provide a buffer against further vacancy spikes. Tenants seeking quality space may find more negotiating room in the near term, while investors focused on value-add or core assets could uncover opportunities amid the current softening.
For the complete report, detailed charts, additional submarket data, and personalized market insights tailored to your specific needs, contact me directly.
Ron Mgrublian
Lee & Associates
Lee & Associates provides comprehensive commercial real estate services across the Los Angeles region with deep expertise in industrial properties.
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Note: Market data reflects Q1 2026 statistics as reported by Lee & Associates Research.
