The San Gabriel Valley industrial market rebounded in the second quarter of 2026 after a soft start to the year. Net absorption swung to a positive 1,205,159 SF, reversing the negative 1,065,324 SF posted in Q1 2026, though still short of the 1,816,317 SF peak recorded in Q3 2025. The City of Industry, which anchors the SGV's industrial base, drove much of the quarter's leasing and sales activity.
Vacancy tightened to 5.4%, down from 6.0% in Q1 2026 and slightly below the 5.9% level from a year earlier. Average asking rents rose to $1.37 per square foot per month NNN, up from $1.32 in Q1 2026. Sale pricing pulled back modestly to $303.00 PSF, while cap rates compressed sharply to 5.00% from 8.00% in the prior quarter. Construction activity remained limited, with only 373,533 SF underway, and total inventory held steady near 178.1 million SF.
| Indicator | Q2 2026 | Q1 2026 | Q4 2025 | Q3 2025 | Q2 2025 |
|---|---|---|---|---|---|
| 12-Mo. Net Absorption (SF) | 1,205,159 | (1,065,324) | (343,262) | 1,816,317 | (166,382) |
| Vacancy Rate | 5.4% | 6.0% | 5.9% | 5.2% | 5.0% |
| Avg NNN Asking Rate | $1.37/SF/mo | $1.32/SF/mo | $1.25/SF/mo | $1.29/SF/mo | $1.32/SF/mo |
| Sale Price PSF | $303.00 | $332.17 | $249.74 | $252.72 | $297.93 |
| Cap Rate | 5.00% | 8.00% | 6.60% | 5.40% | 5.30% |
| Under Construction (SF) | 373,533 | 373,533 | 778,923 | 837,423 | 903,804 |
| Inventory (SF) | 178,073,826 | 178,073,826 | 177,668,436 | 177,609,936 | 177,480,317 |
Top Sales
Top Leases
The return to positive absorption after two consecutive negative quarters is an encouraging signal for an infill market like the San Gabriel Valley, where new supply is constrained by limited available land. For owners, tightening vacancy and rising asking rents point toward improving leverage in renewal and new lease negotiations. For investors, the sharp compression in cap rates from 8.00% to 5.00% suggests pricing has firmed considerably, which may narrow the window for value-add acquisitions at the discounted pricing seen earlier in the year.
Tenants in the market for space should expect less negotiating room than in Q1 2026, particularly for well-located product in City of Industry, which continues to account for the majority of SGV leasing and sales volume.
If you're an owner in the San Gabriel Valley evaluating a sale, refinance, or repositioning strategy, understanding where your property stands relative to these market shifts is the first step. A Broker Opinion of Value can help clarify current market positioning and options. Note that a BOV is a market estimate, not a formal appraisal — if refinancing is part of your consideration, your lender will require a separate licensed appraisal for underwriting purposes.
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What is the current industrial vacancy rate in the San Gabriel Valley?
As of Q2 2026, the San Gabriel Valley industrial vacancy rate was 5.4%, down from 6.0% in the first quarter of the year.
What are industrial asking rents in the San Gabriel Valley?
Average asking rents were $1.37 per square foot per month, NNN, in Q2 2026, up from $1.32 per square foot per month in Q1 2026.
Which city drives most of the San Gabriel Valley's industrial activity?
City of Industry remains the dominant submarket within the San Gabriel Valley, accounting for the majority of the quarter's largest sale and lease transactions.
Are cap rates rising or falling in the San Gabriel Valley industrial market?
Cap rates compressed to 5.00% in Q2 2026, down sharply from 8.00% in Q1 2026, indicating improved investor pricing for industrial assets.
How much new industrial construction is underway in the San Gabriel Valley?
Only 373,533 SF was under construction as of Q2 2026, consistent with the limited development pipeline seen over the past several quarters.
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
