South Bay industrial availability falls to 5.3%

What's happening

The South Bay led the port-to-Inland Empire corridor in Q2 2026. Lee & Associates reports availability fell to 5.3% from 6.3%, with net absorption of 542,069 sq. ft. Rents softened to $1.45/SF NNN, and average sale pricing was $283.88/SF.

The Central LA submarket was also tight, with availability at 5.0%, its lowest since Q4 2023, and the highest sale pricing in the region at $352.53/SF. Lee also highlights advanced manufacturing, particularly aerospace and defense, as a growing demand driver alongside traditional e-commerce logistics. In the Inland Empire, 778,305 sq. ft. of positive absorption was offset by a pipeline of 7.63 million sq. ft., the largest in the region, and Mid-Counties recorded negative absorption of 108,552 sq. ft.

• South Bay: 5.3% availability; +542,069 SF absorption; $1.45 NNN
• Central LA: 5.0% availability; $1.34 NNN; $352.53/SF sale pricing
• Mid-Counties: 6.1% availability; rents down to $1.22 from $1.28
• Inland Empire: 7.5% availability; $0.98 NNN; 7.63M SF under construction

What it means for owners, tenants and investors

The South Bay's recovery tracks strong port volume and growing demand from advanced manufacturing, particularly aerospace and defense users. Tenants seeking port-close space should expect fewer options than a year ago even though rents have not yet risen.

For owners, occupancy gains in the South Bay and Central LA support values on existing buildings. Mid-Counties landlords are still trading rate for occupancy. Investors should note the price gap between submarkets: Central LA averaged $352.53/SF and the Inland Empire $190.69/SF. That spread reflects land scarcity and proximity to the population and ports, and it supports continued demand for well-located infill buildings. Tenants that can operate further inland still save significantly on rent.

The port-close submarkets are tightening first, and tenants there have less time to lock in current rents.

What to watch

Whether South Bay rents stabilize in Q3, and whether aerospace and defense demand extends into the Mid-Counties. Port volume also matters: combined Los Angeles and Long Beach volume is running ahead of 2025, which supports South Bay demand.

Photo: Marcin Jozwiak / Unsplash.