As Investors Pull Back, L.A. Warehouse Users Step In

While the logistics and shipping sectors seem more uncertain than they have in years, with shifting tariffs and trade policy compounded by a diesel fuel crisis, a number of companies are looking to invest in a more stable future.

Increasingly, that means owning, not renting. It’s a dynamic that’s playing out more and more in Southern California, the nation’s largest industrial market.

Industrial users “competed actively” with investors across Southern California early this year, according to data from Smith Industrial Partners, with buyers paying a measurable premium to own rather than lease, a “signal that long-term confidence in the asset class remains intact.” Smith found that renters looking to buy have constantly outpaid institutional buyers, seeking to lock-in current occupancy costs.

And, after trading in vacant warehouses across the region increased last year, eating into some of the post-pandemic glut, sales volumes have continued to rise.

The push for deals that turn operators into owners comes from a variety of overlapping trends, said Erik Hanson, a senior director of capital markets for JLL based in San Francisco. First, on a national level, companies have the dry powder, and after quarters of solid profits, they’re more efficient, and have strong balance sheets and the ability to deploy that capital. 

At the same time, the choppiness of the market, exacerbated by recent interest rate increases, is signaling to traditional institutional players that it’s time to pull back. That’s opening the lane for a different class of buyer.

“It all gives owner-users more leverage to win and buy their real estate,” said Hanson.

At a time when companies are more worried than ever about disruptions, buying key warehouse locations to guarantee resilience and continuity seems like a smart business move, said Zac Rogers, associate professor of operations and supply chain management at Colorado State University. New capital investments may seem fanciful in the current inflation and interest rate environment, but companies may be willing to entertain the idea of buying their real estate. That’s especially true considering the more expensive alternatives.

“In the back of their minds, they think that instead of being a tenant, we could be a landlord,” said Rogers. “The value of storage space, especially in a market like Los Angeles, is probably not going to go down, and so you can also probably sell this purchase to a board as a long-term investment.”

In Southern California in particular, owner-users see the convergence of more attractive pricing, and the centrality of coastal California industrial space to their own operations, as reasons to buy now instead of rent. Last November, manufacturer Future Foam spent $145 million acquiring two buildings covering 417,000 square feet, deciding to jump into ownership when its lease ran out. Chinese firm Jiaherb spent $53.7 million acquiring a warehouse in Orange County from AEW Capital Management in June. In the same month, Holland Flower Market invested $34 for a warehouse in L.A. County’s City of Commerce. 

L.A.-based owner Rexford Industrial has tracked an increase in tenant buyers over the last two years.

“I believe that owner-users see what we see,” said Rexford CEO Laura Clark. “Well-located infill buildings, they’re hard to replace. These businesses and these owners need to be in Southern California to serve their customers, so owning their building locks in their location and it also locks in their costs.”

In July, Rexford announced a portfolio realignment with plans to sell $2 billion in real estate, and has already transacted on roughly $1.5 billion year-to-date, with EQT picking up most of a bulk of these locations. Clark said Rexford Industrial’s longtime conviction stands: That Southern California assets, in one of the world’s largest consumer markets, remain in demand and at a multi-decade low in supply, at a time when the barriers to entry present incredible challenges.

The pullback by institutional buyers in the industrial sector has also been noticeable. JLL has tracked a surge in private capital in national industrial transactions this year. Private bidding volume for industrial assets is up 19 percent year-over-year, hitting $36.2 billion through August 2026, up more than $6 billion compared to the same time last year. 

Private and high-net-worth individuals such as family offices accounted for 46.3 percent of all industrial transactions in the first half of 2026, as well as 64.1 percent of smaller shallow bay sites.

Both owner-users and these private buyers tend to view these assets and investments through a similar lens. As Hanson explained, both private money and operators aren’t looking at the next three to five years. With industrial properties tending to perform better than traditional standbys like office — and assumed to have more solid future demand — a buy and extended hold makes more sense.

With that long-term view in mind, the ability to pick up an asset today that’s trading at a 15 or 20 percent discount to replacement cost makes it a pretty attractive time to play. Savills research manager Caitlin Barrozo said she believes the Los Angeles industrial market has bottomed out, making pricing particularly attractive. NAI found that sale prices for SoCal industrial dropped 16 to 27 percent compared to last year, creating opportunities for owner-users despite higher interest rates. 

“The best returns in real estate come in periods of dislocation,” said Hanson. 

Owner-operator purchases tend to be a significant part of the market, said Chris Nelson, first vice president and senior director of Southern California industrial for Matthews, and typically make up a large portion of sales, especially for the smaller, $25 million-or-under portion of the warehouse sector. What’s happening now, however, is that valuations have bottomed out so much that more users see this as the time to make a move.

According to Green Street Sales Comp Database, industrial trades in Los Angeles worth at least $25 million spiked 128 percent during the first half of 2026. More telling, the weighted average valuation of these properties was $247 a square foot, down 25 percent from the 2022 peak.  

Hanson recalls landlords seeing valuations 40 to 50 percent lower than they were in 2021 and 2022. He said he believes the companies that are doing well will continue to take advantage of this dynamic. 

“You start to have bets on the bottom,” said Nelson. “I’m starting to see more investment companies coming and buying vacancy, which was basically totally unheard of for the past two and a half years. They’re saying, ‘How much lower can the rents go?’” 

This period of increased tenant and operator purchase activity, then — unlike the trend in  Downtown Los Angeles of tenants buying their office buildings — isn’t coming at a time when demand and utilization have cratered. 

Many submarkets in Southern California industrial are experiencing significant activity. In the South Bay, where advanced manufacturing, defense and space startups are riding a wave of venture capital investment, tenants are scouring for space, said Savills’ Barrozo. They’re even looking in northern Orange County to find anything available. 

“I have not seen this type of activity in a very long time,” said Barrozo. “It’s a very exciting time for the L.A. industrial market. Last quarter was quite shocking, in a good way.” 

 The ports and international trade have also been humming along this summer. Despite trade and tariff woes, these shipping hubs — and longshoreman — haven’t paused. The Port of Long Beach recorded one of its busiest summers in history, with record-setting traffic in September.

And as Rexford’s Clark also highlights, the region’s own economy remains on solid footing, despite angst over the shrinking entertainment industry and other issues. Overall unemployment has actually fallen, from 5.6 percent last year to about 5 percent today, and the region’s expansive economy has shown healthy consumption and consumer activity. Southern California remains a valuable industrial market near a consistent customer base, and owner-users plan to stay here long term. 

Despite an economic climate that can appear challenging on a national level, the value of L.A. industrial space remains a known quantity. Opportunities to make deals during periods of lower valuations make all the more sense, especially during periods of dislocation.

“In a bad economy, break even is the new making money,” said Nelson.