SoCal industrial sales roar back as sellers relent on pricing

First-half volume jumped 128% in Los Angeles and the Inland Empire, and sales by major players portend a strong push to yearend

Harbor Warner Business Park | Santa Ana, CA

Aug 25, 2026 | by Real Estate Alert staff

Southern California’s industrial sales market is making a major comeback after a two-year slowdown as sellers increasingly have capitulated on pricing to entice buyers against a challenged leasing backdrop.

Warehouse trades worth at least $25 million in Los Angeles and the Inland Empire spiked 128% in the first half to $3.7 billion, according to Green Street’s Sales Comps Database. The weighted average valuation was $247/sq ft, down 25% from the $329/sq ft peak in 2022.

The second half is shaping up to be strong as well. Most notably, Rexford Industrial last week announced it is under contract to sell EQT Real Estate a $1.2 billion Southern California portfolio. The REIT also has plans to shed up to another $500 million more of warehouses before yearend, and big listings from other major players such as Blackstone, Nuveen Real Estate and PGIM’s real estate business continue to flow.

“This is going to be a banner year for sales in Southern California,” CBRE vice chair Barbara Perrier said. “People who have been on the sidelines are finally selling because they know they can’t hold off forever. And investors think it is a good time to buy, so it’s a perfect storm.”

Los Angeles and the Inland Empire have an outsize footprint in the U.S. industrial market, averaging nearly 10% of annual national sales volume over the past decade. The two markets topped the national league table for volume and commanded the thinnest yields at the market peak. But over the past two years, the national market started to recover from its post-pandemic doldrums while sales volume in Southern California tumbled.

The pandemic boom in e-commerce turbocharged the local industrial market, with huge tenant demand and double-digit rent increases. By 2022, the blended average per-sq ft price on trades of $25 million and up in Los Angeles and the Inland Empire had soared to $329/sq ft, 113% above the national average of $154/sq ft at the time.

But following a building surge that led to oversupply, local prices fell back to Earth. Meanwhile, the national average, after a brief dip, started to recover and hit a record $160/sq ft this year. The pricing premium commanded by Los Angeles and Inland Empire properties over the national average shrank to 55% in the first six months of 2026, its lowest level since before the pandemic in 2019.

Lower pricing has helped reset the local sales market. A rebound started last year with a thaw in the land market. Activity then expanded with an uptick in trading of vacant warehouses, as owners with a glut of empty buildings sold to users eager to buy buildings to occupy. After those deals helped provide clarity on new pricing levels, brisk trading spread to a broader range of properties this year.

Perrier noted that at the market’s peak in 2022, initial annual yields on Southern California industrial trades were routinely below 4%, sometimes even approaching 3%. Now yields are generally in the 5% area, with some trades topping 6%.

Patrick Nally, a senior managing director at JLL, said, “Relative to basis and yields, SoCal has been getting cheaper while other markets have been getting more expensive, so much of the historical pricing premium has evaporated. But what hasn’t changed are factors like the ports, population density and intense development constraints that have historically justified that premium.”

BKM Capital Partners of Newport Beach, Calif., has been a major buyer in the region. So far this year, the firm has scooped up 20 properties totaling 3.6 million sq ft in Los Angeles, the Inland Empire and Orange County for $767 million, and it is still on the hunt.

“BKM is all in on the SoCal markets,” said Brett Turner, a partner and managing director at the firm. “As leasing fundamentals improve and investors gain greater visibility into the recovery, capital is moving off the sidelines. Pricing has reset, and renewed tenant interest is translating into tangible absorption, notably in the Los Angeles and Inland Empire markets.”

Turner said the growth of advanced-manufacturing and defense-technology companies in the region, alongside older aerospace and defense giants, is “adding another durable demand driver to an already land-constrained market.”

A recent Green Street report noted another tailwind: a new state law that took effect this year that imposes more restrictions on development of logistics properties larger than 250,000 sq ft. Many local governments also have enacted moratoriums on construction of new warehouses, which could further constrain development and put upward pressure on occupancy and rents.

Leasing remains challenged as the market works through the slew of warehouses that resulted from the pandemic building boom. But there are glimpses of improvement.

Occupancy in Los Angeles climbed a modest 22 bp in the second quarter to 95%, according to a CBRE report. However, rents fell 2.5% and are now down 32.4% since midyear 2023. In the Inland Empire, occupancy climbed 40 bp to 92.6% at midyear, while rents fell just under 1% in the second quarter, and are down nearly 30% in the past three years.

That plunge in rents took a massive hit on warehouse valuations, which was hard for owners to accept.

In a July 23 report, Green Street said the properties that Rexford had designated to sell this year had a profile suggesting they were purchased at peak valuations during the pandemic boom, with rents that average 20% above market and weighted average remaining lease terms shorter than the rest of the company’s portfolio. After holding on through the down years of 2024 and 2025, the company appears to be ready to take the hit, selling at yields Green Street estimates will be in the low-6% area.

Rexford plans to pay down debt with its blockbuster sale to EQT, which is set to be the largest industrial trade in the state of California since 2007, according to the Sales Comps Database. The firm has not disclosed a list of properties in the EQT sale, but all of its holdings are in Southern California, with the vast majority in Los Angeles and the Inland Empire.

Other big players also are putting large properties in the region up for grabs, and marketing campaigns are touting them as bargains for sellers.

For example, PGIM tapped CBRE to market a two-warehouse industrial campus in Santa Fe Springs in Los Angeles County totaling 521,000 sq ft. It is expected to fetch $190 million. The $365/sq ft valuation would be a discount to replacement costs, estimated north of $400/sq ft.

Meanwhile, in the Inland Empire:

• Alaska Permanent Fund is marketing Empower Brands Distribution Center, a fully leased 984,000 sq ft bulk-distribution property in Redlands worth about $210 million, or $213/sq ft. JLL has the listing. The pitch is the 5.75% initial annual yield that would be up to 275 bp higher than the capitalization rates such properties commanded when their values peaked a few years ago.

• Nuveen is shopping a 718,000 sq ft bulk-distribution warehouse in Rialto that is used as a fulfillment center by a logistics group to distribute Apple products. It is expected to trade for $185 million, or $258/sq ft. JLL is touting it as an opportunity to purchase that property at a 35% discount to peak pricing for bulk-distribution warehouses in the Inland Empire.

• Blackstone is pitching a fully leased, 931,000 sq ft portfolio via JLL that is expected to fetch $166 million. A purchase at that $178/sq ft valuation would give a buyer an attractive initial annual yield of 6%.

CBRE’s Perrier said that Southern California’s industrial sales market is stabilizing after the frenzied runup during the pandemic era and the ensuing bust and downturn.

“Southern California historically has been such a strong market; it was just hit hard,” she said. “I have been doing this 38 years, and it was a very difficult time to be in the market.”

Perrier added that now “we know where debt is and we know where people’s heads are and where things are going to trade. And investors aren’t leaning in like they were in frothy markets. People are more conservative.”

BKM’s Turner said that bidding pools are “full but not overcrowded.”

“We are still finding attractive opportunities at this point of the cycle,” he said. “But it won’t last long.”

Read the full article on GreenStreetnews.com