Los Angeles boasts a diverse and resilient economy rooted in entertainment, tourism, international trade, fashion, and aerospace. Its strong creative and entrepreneurial ecosystem fuels business formation and self-employment, supported by world-class universities like USC, UCLA, and Caltech that supply a steady pipeline of talent. The metro’s trade and logistics sector, anchored by the ports of Los Angeles and Long Beach, remains vital but vulnerable to tariff fluctuations, while tourism continues to thrive, welcoming 50 million visitors annually and generating billions in local spending.

 

Los Angeles Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 5.7%
• Current Population: 9,775,675
• Households: 3,500,677
• Median Household Income: $93,128

 

Population, Labor, and Income Growth

Source: CoStar Group, Inc.

 

Key Findings

• Despite high land costs and restrictive policies, 4.1 million square feet of industrial space is under construction, with a focus on mid-sized properties.
• Institutional investors and REITs maintain a 35% market share, and pricing for logistics assets averages $316/SF, signaling steady long-term investment confidence.
• Los Angeles recorded a population gain of 40,000 in 2024 after population declines occurred in 2021-2023, which is a positive signal for the metro’s recovery.

 

Market Performance

Los Angeles’ industrial market has softened, with vacancy at 6.4% in Q3 2025, up from the 1.7% low in early 2022. The increase stems largely from occupancy losses rather than new supply, as demand has weakened due to population decline, retailer bankruptcies, and higher interest rates weakening consumption and housing-related industries.

 

Nearly 30% of the 14 million square feet delivered since 2023 remains vacant, especially in port-adjacent submarkets like Vernon and Commerce. Asking rents have fallen nearly 20% from 2023 peaks, yet a rebound may emerge by mid-2026 if leasing momentum persists and retail sales stabilize.

 

Los Angeles Industrial Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

Los Angeles Construction

Industrial construction remains constrained by high land costs and strict development policies, limiting large-scale projects within the county. As a result, major logistics developments have shifted to the Inland Empire, leaving Los Angeles with less than 5% of its inventory built in the past decade, compared to the national 18%. While 50.3 million square feet was delivered, demolitions of 33.6 million square feet kept supply growth under 2%. Current construction totals 4 million square feet, with only 20% pre-leased. Developers remain active, focusing on mid-sized projects in areas like Long Beach, Santa Clarita, and the San Fernando Valley despite soft demand and rising vacancies.

 

SF Construction Starts

Source: CoStar Group, Inc.

 

SF Under Construction

Source: CoStar Group, Inc.

 

Sales

Sales activity has slowed but remains steady relative to national trends. Quarterly sales volume totaled about $1 billion in Q3 2025, with annual activity around $4 billion. High financing costs, weaker fundamentals, and the ULA transfer tax continue to weigh on transactions. Institutional investors and REITs account for roughly 35% of acquisitions, while user purchases have grown to over 20% of volume. Median pricing for large logistics assets averages $316 per square foot, about 15% below 2022 levels, as cap rates expanded to 5.5–6.5%.

 

Sales Volume

Source: CoStar Group, Inc.