SoCal Industrial Q2 2025 Market Breakdown with Jesse Gundersheim

In this episode of the Industrial Insights podcast, Justin Smith and Jesse Gundersheim of CoStar discuss the current state of the industrial market as they approach the end of Q2. They explore various themes including market trends, leasing dynamics, vacancy rates, population growth, port activity, construction trends, and sales. The conversation highlights the challenges and opportunities within the market, providing insights into tenant behavior, economic predictions, and the overall health of the industrial sector.

Key Takeaways

• The industrial market is experiencing a weakening in fundamentals.
• Vacancy rates are rising, but not as steeply as before.
• Smaller buildings are performing better than larger ones in terms of vacancy.
• Tenants are gaining leverage in negotiations due to increased options.
• Population growth in LA and Orange County is showing positive signs.
• Port activity does not directly correlate with local industrial absorption.
• Retail sales forecasts indicate a decline in growth rates.
• Leasing activity is increasing, but new listings are also rising.
• Construction starts have significantly decreased from peak levels.
• Comparative analysis shows that rents in SoCal are competitive with other regions.

Chapters

• 00:00 - Introduction and Market Overview
• 02:21 - Current Market Sentiment and Trends
• 05:01 - Leasing Activity and Vacancy Rates
• 07:27 - Tenant Dynamics and Deal Economics
• 10:08 - Population Growth and Its Impact on Demand
• 12:13 - Port Activity and Its Correlation with Industrial Absorption
• 14:53 - Sales Trends and Institutional Interest
• 17:25 - Construction Trends and Future Outlook
• 20:03 - Subleasing Dynamics and Market Adjustments
• 22:18 - Comparative Analysis of Regional Markets
• 24:56 - Final Thoughts and Future Predictions

Resources

Connect with Jesse Gundersheim

• https://www.linkedin.com/in/jessegundersheim/
• jgundersheim@costar.com

Connect with Justin Smith

• https://smithcre.com/
• https://www.lee-associates.com/
• jbsmith@leeirvine.com
• https://www.linkedin.com/in/justinbsmith