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Q2 2026

Q2 2026 Los Angeles Commercial Real Estate Market Report

Focus: Q2 2026 Market Trends

Executive Summary

The Los Angeles commercial real estate (CRE) market is navigating a complex rebalancing period in Q2 2026. The Office sector continues to face head-on structural challenges, weighed down by high tenant availability, corporate downsizing, and a gradual recovery timeline within entertainment and localized media support networks.[1] Industrial fundamentals are experiencing a significant supply correction; total available inventory has tracked substantial space increases as sublease availabilities expand, shifting transactional leverage firmly toward inbound occupiers.[2] Retail remains a notable regional bright spot, experiencing resilient net absorption and stable investor demand across high-performing, necessity-anchored suburban shopping corridors.[1] Meanwhile, the Multifamily market has cooled from its past cyclical peaks, settling into a phase of flat pricing, stabilized yield returns, and tightly constrained new construction volume.[1]

TenantBase Proprietary Data highlights the distribution of active tenant demand over the last 90 days:

• Storefront/Retail dominated market activity with 45.55% of all searches (317 deals).[3]
• Office was the second most active sector at 28.59% of demand (199 deals).[3]
• Warehouse accounted for 26.58% of total search volume (185 deals).[3]

Office Market

Market Overview

The Los Angeles office market remains in a protracted recovery and stabilization phase in Q2 2026, dealing with space contractions from traditional corporate tenants while realizing selective submarket expansions.[1]

• Leasing Momentum: Metro leasing volume has tracked steady transaction levels, outperforming the five-year quarterly average even as large-scale users right-size footprints to accommodate permanent hybrid office plans.[1]
• Footprint Expansions: Despite widespread tenant footprints shrinking, the market is logging major outlier expansions, exemplified by massive healthcare and regional service headquarters expanding square footage up to 50% across key valleys.[1]
• Concession Climate: With widespread vacancy across commoditized Class B and secondary Class A inventory, landlords are frequently forced to deploy aggressive tenant improvement allowances and rental concessions to lock down stable lease covenants.[1]

TenantBase Activity

• Demand Share: Office accounted for 28.59% of total search volume (199 deals).[3]
• Lease Term Preference: Tenant requirements show a major preference for short-term and highly flexible parameters, led heavily by immediate transactional commitments:[3]
  
  • Less than one year: 52.38% of deals (44 deals).[3]
  • 3-5 Years: 20.24% of deals (17 deals).[3]
  • 2-3 Years: 17.86% of deals (15 deals).[3]
  • 5+ Years: 5.95% of deals (5 deals).[3]
  • 1-2 Years: 3.57% of deals (3 deals).[3]
• Size Requirements: Requested floor areas scale dramatically based on commitment length.[3] Short-term leases under one year require highly nimble footprints, averaging a lower parameter of 642.50 SF and an upper bound of 1,425.00 SF.[3] Mid-term 3-5 Year terms double requirements to a lower bound average of 1,833.33 SF and an upper bound of 3,608.33 SF.[3]

Industrial & Warehouse Market

Market Overview

The Los Angeles industrial market is actively working through a structural inventory correction, driven by a normalization of international supply chains and localized logistics networks.[2]

• Supply & Absorption: Net absorption figures have settled into a measured pace, keeping regional vacancy near 5.4% while overall market availability edges up to 8.1% across primary industrial submarkets.[2]
• Port Infrastructure Context: Cargo throughput at the Ports of Los Angeles and Long Beach remains fundamentally stable, processing over 1.5 million combined TEUs monthly, despite front-loaded shipments normalizing from historical peaks.[2]
• Rental Rates: Average direct asking lease pricing has adjusted slightly downward to $1.21 PSF NNN monthly, giving local tenants significant negotiating leverage across large big-box distribution nodes.[2]

TenantBase Activity

• Demand Share: Warehouse represented 26.58% of total search volume (185 deals).[3]
• Lease Term Preference: Industrial tenant demand strongly anchors mid-to-short curve commitments over the 90-day window:[3]
  
  • 1-2 Years: 32.93% of deals (27 deals).[3]
  • 3-5 Years: 24.39% of deals (20 deals).[3]
  • 2-3 Years: 21.95% of deals (18 deals).[3]
  • Less than one year: 10.98% of deals (9 deals).[3]
  • 5+ Years: 9.76% of deals (8 deals).[3]
• Size Requirements: Required square footage scales significantly with transaction longevity.[3] Inquiries for shorter-term 1-2 Year commitments tracked an average lower bound of 2,750.00 SF, while intermediate 3-5 Year commitments required an average lower bound of 13,250.00 SF.[3] Long-term commitments spanning 5+ Years required the largest footprints, averaging a lower bound requirement of 23,200.00 SF up to an upper capacity of 11,875.00 SF.[3]

Retail Market

Market Overview

Retail continues to rank as one of the tightest and most fundamentally resilient sectors across Southern California, insulated by limited speculative construction starts.[1]

• Absorption & Demand: Strong retailer backfilling remains highly active. High-performing corridors anchored by grocery operators, daily-necessity anchors, and value-oriented concepts are capturing rapid tenant move-ins.[1]
• Development Constraints: Ground-up speculative construction remains highly disciplined, leaving landlords with clear pricing power during renewals across highly trafficked suburban neighborhood configurations.[1]

TenantBase Activity

• Demand Share: Retail/Storefront activity heavily dominated the local market, capturing 45.55% of all tracking metrics (317 deals).[3]
• Lease Term Preference: Retail operators demonstrate a strong intent toward mid-to-long term operational footprints to safeguard their consumer presence:[3]
  
  • 3-5 Years: 32.45% of deals (49 deals).[3]
  • 5+ Years: 21.19% of deals (32 deals).[3]
  • 2-3 Years: 17.22% of deals (26 deals).[3]
  • Less than one year: 16.56% of deals (25 deals).[3]
  • 1-2 Years: 12.58% of deals (19 deals).[3]
• Top Locations: Out of the submarkets explicitly tracked, the highest concentrations of local transaction interest centered heavily on Los Angeles (107 deals), followed by the Northwest LA/San Fernando Valley (34 deals), South Bay (32 deals), West LA (24 deals), and Downtown (22 deals).[3]

Multifamily Market

Market Overview

The Los Angeles multifamily sector is displaying solid baseline performance in 2026, moving past pandemic-era volatility into a period of healthy integration.[1]

• Vacancy & Absorption: Renter demand remains supported by a structurally tight regional housing profile, allowing the market to steadily absorb active luxury completions while keeping core vacancy stabilized.[1]
• Construction Ceilings: Ground-up development activity has downshifted across primary submarkets. Supply items under active construction represent less than 2.0% of existing inventory, ensuring a low supply ceiling that positions the asset class for long-term recovery.[1]

2026 Outlook

Moving through the remainder of 2026, the Los Angeles CRE market is positioned for continuing structural alignment across asset classes.[1, 2]

• Office Rebound: Highly localized tenant expansions and specialized medical support services will continue to target high-quality Class A blocks of space, while non-amenitized older structures will face repositioning or eventual conversion.[1]
• Industrial Equilibrium: As pipeline expansion and active development drop sharply to just 1.6 million SF, stable container processing volumes will allow current warehouse inventory to steadily compress back toward balanced historical baselines.[2]
• Multifamily Consistency: Highly disciplined construction pipelines paired with an exceptionally tight regional residential market will protect baseline asset valuations, paving a clean runway for localized occupancy stabilization into 2027.[1]

Sources

[1] Savills: Los Angeles Office Market Insights & Space Trends Report 2026

[2] CBRE: Los Angeles Industrial Market Figures & TEU Tracking Q1/Q2 2026

[3] TenantBase Proprietary Market Data (Dashboard Export: SEO Market Reports la, June 29, 2026)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.