Westside Industrial Market Report – Q2 2025

July 22, 2025

Strategic Shifts in a Built-Out Submarket

The industrial real estate market on Los Angeles’ Westside is entering a transitional phase. Known for its proximity to LAX, strong demand from tech and media firms, and highly constrained supply, this submarket is experiencing a rare moment of increased vacancy and softening rents.

As of mid-2025, both users and investors are responding to these shifts with a more cautious but strategic mindset. Understanding what’s happening now will help businesses and property owners navigate what comes next.

Vacancy on the Rise, But with No New Supply

Vacancy has reached 8.0 percent in the Westside industrial market, double its pre-pandemic levels. The rise is primarily due to a series of larger move-outs, especially from flex and creative-industrial tenants.

Notable departures include:

Omega Cinema Props, which vacated 188,400 square feet in 2023
DHL and Irwin Naturals, who exited a combined 95,000 square feet in 2024

While vacancy is elevated, there is no new inventory under construction. In fact, there has been no new large-scale delivery since a 160,000-square-foot R&D facility in Santa Monica more than a decade ago. This lack of development points to limited future supply, particularly as land scarcity continues to restrict industrial expansion in this submarket.

Sales Activity Slows, But Private Buyers Remain Active

Year-to-date sales volume stands at $50.3 million, with an average price per square foot of $299.32. The average cap rate has expanded to 7.3 percent, indicating a shift in pricing expectations and stronger returns for buyers.

Institutional acquisition has slowed, with private buyers and owner-users now driving most transactions. These groups are targeting smaller parcels in markets like Culver City and Santa Monica, where demand remains steady despite macro uncertainty.

One notable transaction:

1600 Olympic Blvd, Santa Monica sold for $3.5 million, or $686 per square foot, at a 5.3 percent cap rate

Rents Adjust, But Remain High by Market Standards

Westside industrial rents are still among the highest in Los Angeles, although they have declined slightly in recent months.

Current asking rates:

Overall average: $2.83 per square foot
Flex space: $3.22 per square foot
Logistics space: $2.62 per square foot

Year-over-year rent growth has dipped by 4.3 percent, reflecting greater competition among landlords and more options for tenants. However, premium rates are still being maintained in locations close to LAX and in buildings that offer creative or flex configurations attractive to biotech, entertainment, and media users.

Built-Out and Constrained: No New Supply on the Horizon

The Westside is effectively built out. Over the past decade, the net industrial footprint has declined by more than 1.6 million square feet, with much of the former inventory converted to other uses such as multifamily housing or creative office.

Since 2023, only two industrial properties under 5,000 square feet each have been delivered. There is no active construction pipeline, and little land remains for new development. This makes every existing site that much more strategic, particularly for air-cargo and urban logistics operators.

Q2 2025 Snapshot: Westside Industrial Metrics

Metric	Value
Vacancy Rate	8.0 percent
Average Asking Rent	$2.83 per square foot
Flex Space Rent	$3.22 per square foot
Logistics Rent	$2.62 per square foot
Net Absorption (12 mo)	-167,461 square feet
Rent Growth (YoY)	-4.3 percent
Construction Pipeline	0 square feet
Sales Volume (YTD)	$50.3 million
Average Sale Price	$299.32 per square foot
Average Cap Rate	7.3 percent

What This Means for Tenants and Investors

Tenants currently have more flexibility than they have in years. With increased availability and stabilising rents, it may be an ideal time to consider relocating, resizing, or negotiating more favourable lease terms.

For investors, the rise in cap rates and shift toward private deal flow suggest new opportunities to acquire well-located properties at adjusted values. Properties near LAX, as well as flex spaces in Culver City, continue to attract attention from users seeking a balance of location and adaptability.

Local Insight You Can Act On

Lance Levin and the team at Lancelot Commercial specialise in navigating the complexities of the Westside industrial market. Whether you’re evaluating new space or preparing for acquisition, our local expertise and strategic guidance can help you move with confidence.

Phone: 310 839 3333

Browse our current properties here

Based in West LA, advising clients in Culver City, Santa Monica, Playa Vista, and beyond.

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