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SoCal Industrial Slows Down to ‘Normal’ Levels

SoCal industrial leasing is slowing down due to a pandemic oversupply caused by delayed construction and softening demand.

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Good morning. Southern California industrial leasing is slowing down due to a pandemic oversupply caused by delayed construction and softening demand.

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SoCal Industrial Leasing Stabilizing to Pre-Pandemic Levels

SoCal Industrial Leasing Slows Down to Normal Levels

A recent analysis of the Southern California industrial market points to a return to pre-pandemic vacancies and rents, specifically in smaller segments, thanks to an oversupply from pandemic-era construction.

Big picture: A recent ConnectCRE survey revealed that SoCal industrial leasing activity is cooling down, pointing to stabilizing vacancies and rents. According to Lexi Geiger, Director of Acquisitions at Bixby Land Co., the surge in e-commerce demand during the pandemic led to a notable rise in leasing, resulting in an oversupply due to delayed construction projects.

Size matters: Jeff Rinkov, SVP and CEO of Lee & Associates noted that stabilizing industrial vacancy and rental rates are predominantly affecting small- to mid-size properties. Carter Ewing, Managing Partner at CT Realty, also pointed out that the supply gut has resulted in more discounted sublease listings, compounding the problem. 

Changing landscape: James Camp, Senior Managing Director at Rockefeller Group, emphasized that Inland Empire, an industrial darling during the pandemic, is finally losing steam. Meanwhile, other markets like Phoenix and Las Vegas are showcasing better performance, marking a significant shift in industrial hotspots.

The customer is always right: SoCal tenants are also getting pickier, asking for additional trailer storage, higher ceilings, and smaller regional warehouses to optimize local delivery times. Bob O’Neill from CapRock and Lexi Geiger noted that buildings with 40-foot clear heights are in particularly high demand. Chase Watson from CT Realty and Jeff Rinkov of Lee & Associates remain optimistic about the absorption potential of high-quality, Class A industrial spaces entering the market soon.


Taking a breather: Despite current oversupply concerns, experts believe that SoCal's industrial fundamentals point to a temporary market pause rather than a prolonged downturn. High activity levels at the Ports of LA and Long Beach, coupled with a growing SoCal population, continue to support the demand for quality industrial spaces. Current forecasts include stabler absorption rates and rents by the end of 2024.


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✍️ Editor’s Picks

  • Booming Baltimore: Already called ‘the next Nashville’ by some, Baltimore’s current real estate projects total over $12B, revitalizing the historic city with new economic opportunities.

  • Unloading loans: Some banks are quietly dumping CRE loans as office buildings continue to struggle, signaling continued distress in the face of looming CRE loan maturities.

  • Housing big cats: Charlotte’s city council will soon vote on whether to allocate $650M in public financing to a $1.3B stadium upgrade for David Tepper’s Panthers.

  • Pension pivot: Canadian pension funds, managing around $1.24T in assets, have been hit hard by recent real estate losses and are now retooling operations after 16% losses.


  • Refi reality: 3L Real Estate, the developer of 820 South Michigan Avenue, may hold onto 150 apartments due to refinancing challenges on a $29M loan.

  • It’s official: The Office of the Comptroller of the Currency released a report that emphasized high borrowing costs are stressing both office and multifamily properties, posing concerning credit risks.

  • Finding financing: Bell Partners secured $119.5M in financing from Walker and Dunlop to purchase 380 Vistacourt Drive, an 831-unit apartment complex in Plano, TX.

  • Regulatory rush: Recent multifamily regulations have focused on rent control, high fees, and antitrust issues in the sector, impacting nationwide legislation.

🏭 Industrial

  • Industrial reign: Two mammoth deals are driving Brooklyn's industrial property market dominance, accounting for 84% of the borough’s sales volume in the past two years.

  • Record-setting sale: Crest Partners acquired a 2.3-acre San Francisco bus repair site for $39.5M, the city's highest industrial purchase since 2022.

  • Innovative growth: Phoenix's Mack Innovation Park in Scottsdale secured $63M in financing for its 305.4KSF phase one, aiming for late 2025 completion.

  • Warehouse wealth: Houston-based Corebridge Financial is buying a Miami Gardens warehouse for $25.5M, fully leased to Moishe Mana.


  • Changing appetites: ‘Smash’ burgers with thinner, crispier patties are quickly becoming the preferred American burger, and smash burger chains are profiting by charging up to $20 a burger.

  • Retail revelry: Newport Capital bought a 109.8KSF property in Chicago’s Near West Side for $30.6M from Kite Realty Group.

  • Trucking troubles: National trucker US Logistics Solutions filed for bankruptcy, ending 2K jobs and taking 500 trucks off US highways, a sign of the times for the freight industry.

  • Big partnership: Target (TGT) partners with Shopify (SHOP) to expand its online marketplace in an effort to boost sales growth. So far, Target Plus has doubled its seller count.


  • Liberty Plaza loan: Brookfield (BN) secured a $750M loan from Morgan Stanley for Manhattan’s 1 Liberty Plaza after buying a 49% stake from Blackstone (BX).

  • Sudden fire sale: A San Francisco investor is seeking buyers for a 16-story Chicago office building that’s over 58% vacant after suffering recent losses on other properties.

  • Primetime: DC currently leads the US in terms of prime office square footage, with 68 prime office buildings that command an 84% rent premium, surpassing even Dallas.


  • Presidential nostalgia: The 12-room, 4-cabin Stonewall Motor Lodge in Texas Hill Country, with ties to LBJ, is on sale for $2.5M.

  • Downhill decline: Colorado’s Vail Resorts saw a 17% drop in lift tickets, but revenue actually went up 3.6% to $1.3B in 2023–24, indicating the slopes are increasingly becoming a luxury getaway.

  • Expanding the empire: Apple Hospitality REIT (APLE) acquired Embassy Suites by Hilton Madison Downtown (HLT) for $79.5M, expanding their hotel portfolio to 224 properties.



Large US banks' criticized loans have reached a 14-year high. Loans categorized as ‘special mention,’ ‘substandard,’ ‘doubtful,’ or ‘loss’ are all growing. These loans significantly increased from 2010 to 2024, peaking in 2023. Meanwhile, the top 100 US public banks by total assets show a similar trendline, suggesting heightened risk.

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