Commercial real estate markets in Southern California are exhibiting disparate trends across industrial, office, multifamily, and retail sectors, prompting shifts in strategies among brokers, developers, landlords, and tenants. Industry experts emphasize that these property types are no longer moving in unison, even within localized submarkets.
Meny Atias, operating principal of KW Commercial SoCal, a rapidly expanding firm with around 60 associates in the greater Los Angeles area, highlighted the sectoral divergence. “Commercial real estate can no longer be viewed as one market,” Atias said, noting significant performance variation both across asset classes and geographic submarkets.
The industrial sector experienced a pronounced surge during the early stages of the COVID-19 pandemic, fueled by heightened e-commerce activity. While logistics firms have pulled back somewhat in recent years, the Southern California industrial market remains robust, supported by growth in aerospace and defense industries. Reflecting this momentum, CREA, an El Segundo-based tenant representation firm specializing in hard tech, life sciences, food and beverage, and entertainment industries, plans to open an office in Orange County. Founded in 2023 by industry veterans Ted Simpson and Erik Stiebel, CREA aims to bolster support for the growing hard tech sector in the region.
In contrast, the office market is showing signs of gradual recovery. According to a Cushman & Wakefield analysis of 220 office tenant relocations in Orange County between 2024 and mid-2026, tenants are leveraging higher vacancy rates and favorable leasing terms to upgrade office spaces and refine their footprint. Jolanta Campion, Southern California research director at Cushman & Wakefield, noted that these moves are often motivated by factors beyond rental cost alone. Tenants are securing enhanced buildings and stronger concession packages despite some landlords offering additional incentives to attract long-term commitments.
The multifamily sector, however, faces challenges due to rising interest rates, which have influenced both pricing and transaction volume among buyers and sellers. Retail is similarly strained, particularly for mall operators and strip center owners grappling with declining foot traffic as anchor tenants become less reliable magnets for shoppers.
Atias summarized the prevailing market sentiment: while elevated interest rates have constrained transaction activity and altered deal structures, they have also encouraged stakeholders to adopt more pragmatic approaches. “Asset quality, location, cash flow and the ability to create long-term value matter more than ever,” he said, underscoring ongoing opportunities amid the evolving commercial real estate landscape in Southern California.