Building Toward Accessibility and Affordability | October 2025
As we move through the third quarter, Southern California’s industrial market has shown steady activity despite economic uncertainty and evolving global trade dynamics. Recent data indicate that both Orange County and the Inland Empire have experienced leasing and absorption trends that highlight their respective roles in the region’s industrial market.
Orange County(1)
Orange County remains a regional leader, with leasing activity surging in Q2. According to JLL’s Q2 2025 Industrial Report, the county recorded over 3 million square feet of leasing volume, a 30% increase quarter over quarter. Mid-sized leases between 50,000 and 100,000 square feet rose by nearly 69%, outperforming the five-year quarterly average by close to 30%. This growth is driven by manufacturers in industrial equipment, home appliances, and aerospace sectors, many of which have already begun occupying newly leased spaces.
While net absorption remains slightly negative year to date at -783,252 square feet, it has improved for two consecutive quarters. Orange County continues to lead the region with the lowest vacancy rate at 6.2% and availability rate at 8.5%, along with the highest average asking rent at $1.62 per square foot. These metrics reflect the county’s robust manufacturing base and its ability to attract and retain high-quality tenants despite broader market headwinds.
Inland Empire (2)
The Inland Empire, one of Southern California’s most active industrial hubs, is showing signs of recalibration while maintaining its strategic importance. Leasing activity declined by nearly 20% year over year, largely due to cautious tenant behavior and broader economic volatility. However, this moderation is part of a healthy market cycle, and the region continues to attract interest for large-scale
logistics and distribution operations.
Demand for large blocks of space, especially those over one million square feet, remains stable. While total vacancy in this segment stands at 5.5%, the effective vacancy rate drops to just 3.2% when accounting for committed space. This highlights the enduring appeal of Class A assets and the region’s infrastructure advantages.
New construction has slowed, with groundbreakings down 97% year over year and quarterly completions down 61% compared to Q2 2024. Yet, with nearly 9.9 million square feet under construction and over 5.2 million square feet delivered year to date, the Inland Empire remains active and forward-moving. Asking rents have softened to $1.14 per square foot, and concessions are increasing, creating favorable conditions for occupiers.
Strategic Outlook Across the Region
Trade policy uncertainty is expected to persist, prompting companies to reevaluate logistics strategies. JLL’s national insights suggest a growing shift toward regionalization and reshoring, which is expected to drive long-term demand for domestic industrial space. Southern California, with its strong infrastructure and deep labor pool, is well-positioned to benefit from these trends.(3)
From a strategic standpoint, our strategy* remains on identifying opportunities that align with long-term fundamentals. We are closely monitoring tenant shifts, absorption trends, and construction pipelines to ensure our positioning reflects both current realities and future potential.
Resilience and Opportunity Ahead
Southern California’s industrial market continues to evolve, but the fundamentals remain strong. Orange County’s performance underscores the value of investing in markets with resilient tenant demand and high-quality assets. Meanwhile, the Inland Empire’s scale, infrastructure, and logistics capabilities make it a cornerstone of regional industrial strategy.
As we navigate this dynamic landscape, our approach remains grounded in adaptability and long-term vision. With disciplined strategy and a commitment to thoughtful development, we are well-positioned to create lasting value in the quarters ahead.
Disclosures
(1) Source: https://www.jll.com/content/dam/legacy/jll-com/documents/pdf/us/market-dynamics/25-insight-orange-county-industrial-marketdynamics-q2-2025.pdf?utm_medium=email&utm_campaign=&utm_source=&utm_content=191567
(2) Source: https://www.jll.com/content/dam/legacy/jll-com/documents/pdf/us/market-dynamics/25-insight-inland-empire-industrial-marketdynamics-q2-2025.pdf?utm_medium=email&utm_campaign=&utm_source=&utm_content=191567
(3) Source: https://www.jll.com/en-us/guides/adapting-to-shifting-trade-policies-5-predictions-for-industrial-3 real-estate
*There is no assurance that this strategy will succeed to meet its investment objectives.
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