Garden Grove's industrial market is showing signs of softening after several years of tight conditions, with vacancy climbing to 4.6% and rents pulling back slightly. At the same time, a major portfolio sale in the submarket points to continued investor confidence in the long term. Here's a look at where things stand.
Vacancy in Garden Grove has historically ranged between 2% and 5% over the past five years, but occupancy losses through 2025 and the first half of 2026 pushed the rate to 4.6% as of the third quarter — a cyclical high. Net absorption has trended negative recently, totaling roughly negative 76,800 square feet over the trailing 12 months, as tenant demand softened alongside slower inventory growth and continued volatility in Southern California port imports. Availability across the submarket now stands at 5.2%.
Leasing has been limited but not absent. GKN Aerospace signed for 125,800 square feet at 12101 Western Ave in Garden Grove in 2025 at an asking rate of $1.75 per square foot, triple net. Nearby in Westminster, a 60,000-square-foot building at 14650 Hoover St was leased in the first quarter of 2026 at $1.28 per square foot, reflecting the broader softening in asking rents across the submarket.Weighted-average asking rents for available space in Orange County have declined approximately 12% from peak levels as landlords adjust to elevated availability. Garden Grove's own market asking rent currently sits at $1.48 per square foot, down 0.5% year over year. Forecasts point to rents returning to an upward trajectory in 2027, with growth accelerating in 2028 — and over the longer term, Orange County rent growth is expected to outpace the national average given constrained availability and high barriers to new development.
Garden Grove remains a tightly constrained infill market for new industrial development. There have been zero deliveries over the past 12 months, and only one project is currently underway: an 88,164-square-foot, two-story building at 11311 Western Ave being developed by Scannell Properties, expected to complete in August 2026. Scannell acquired the site — which included a 41,000-square-foot office building — in August 2022 for $20 million, demolishing the existing structure in 2023 to make way for the new project. Before this cycle, the last new supply added to the submarket was in 2024, when Prologis delivered a 149,300-square-foot warehouse at 12691 Pala Dr, later leased to Daisy Nail Products.
Industrial sales volume in Garden Grove reached roughly $70 million in 2025, still below the submarket's prior 10-year annual average of $76 million, as transaction counts fell to 13 deals for the year. Activity picked up meaningfully in 2026, driven largely by one significant portfolio transaction: in June, BKM Capital Partners and joint venture partner Kayne Anderson Real Estate acquired a light-industrial portfolio totaling 8.5 million square feet across 275 buildings from Blackstone subsidiary Link Logistics for $1.81 billion. The portfolio included Garden Grove's Grove22 Industrial Park, contributing to a notable jump in submarket sales volume for the second quarter.
Cap rates have expanded from the 3% to 4% range seen a few years ago to a current 5% to 7% range. A representative recent sale: a 51,764-square-foot building at 7311 Doig Dr, originally built in 1978 and renovated in 2023, sold in November 2025 for $16.2 million, or $313 per square foot, at a 6.8% cap rate. The property was fully leased to Flowers Bakery under a seven-year lease running through 2030.Investor composition has stayed consistent, with private investors and private equity funds accounting for nearly 70% of total sales volume over the past decade. Institutional investors and REITs represent 17% of volume, with user buyers making up the remaining share.
Garden Grove's fundamentals reflect a market in a cyclical pause rather than a structural downturn. Limited land availability and high barriers to new construction continue to support the submarket's long-term rent growth story, even as near-term vacancy and absorption numbers soften. For owners weighing a sale or simply wanting a current read on where their property stands, a complimentary Broker Opinion of Value offers a data-driven starting point based on current pricing and cap rate trends.
Q: What is the current industrial vacancy rate in Garden Grove?
A: Vacancy in Garden Grove's industrial market stood at 4.6% as of the third quarter of 2026, near a cyclical high for the submarket.
Q: Are industrial rents in Garden Grove rising or falling?
A: Asking rents have softened slightly, down 0.5% year over year to $1.48 per square foot, though rents are forecast to return to growth starting in 2027.
Q: Is there new industrial construction happening in Garden Grove?
A: Very little. Garden Grove is a highly constrained infill market with only one project currently under construction, an 88,164-square-foot building at 11311 Western Ave expected to deliver in August 2026.
Q: What are current cap rates for industrial properties in Garden Grove?
A: Cap rates have expanded from the 3% to 4% range seen in recent years to a current range of roughly 5% to 7%, with recent transactions averaging around 6.8%.
Q: Is now a good time to sell an industrial property in Garden Grove?
A: It depends on the property and the owner's goals. Given shifting cap rates and softer near-term demand, a current Broker Opinion of Value is a useful starting point for owners weighing a sale or planning a 1031 exchange. Note that a Broker Opinion of Value is a market estimate, not a formal appraisal — owners pursuing a refinance will need an appraisal from a licensed appraiser as part of the lender's underwriting process.
Market data sourced from CoStar Group, licensed to Lee & Associates.
We specialize in industrial real estate from the greater Los Angeles to the Inland Empire markets, including: Long Beach, Carson, Torrance, Gardena, Compton, Rancho Dominguez, Wilmington, Paramount, Santa Fe Springs, Huntington Beach, Garden Grove, Irwindale, Signal Hill, Pomona, City of Industry, and Ontario, serving surrounding submarkets including LA South Bay, LA Central, Mid-Counties, San Gabriel Valley, Orange County and the Inland Empire.
Ron Mgrublian
Principal, Lee & Associates Los Angeles – Long Beach
562-354-2537
CalDRE# 01902882
