Los Angeles is the undisputed industrial capital of the Western United States. Home to the busiest port complex in North America, a sprawling network of distribution corridors stretching from the waterfront to the Inland Empire, and a manufacturing base that still employs hundreds of thousands of workers, the LA metro area contains over 1 billion square feet of industrial space. As of late 2025, the market is stabilizing after a period of correction, with vacancy hovering near 5.4%, rents settling around $1.35 to $1.44 per square foot triple net, and leasing demand strengthening thanks to tariff-driven inventory stockpiling and continued e-commerce growth.
Clear House Lending specializes in industrial property financing throughout the greater Los Angeles region, offering bridge loans, SBA loans, DSCR loans, and conventional commercial mortgages designed for warehouse owners, logistics operators, cold storage developers, and industrial investors. Whether you are acquiring a distribution center near the Port of Long Beach, refinancing a manufacturing facility in Vernon, or converting flex space in the San Fernando Valley, this guide covers everything you need to know about securing industrial financing in Los Angeles.
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What Does the Los Angeles Industrial Real Estate Market Look Like Right Now?
The Los Angeles industrial market spent much of 2024 and early 2025 working through a correction after the pandemic-era boom that pushed vacancy to historic lows and rents to record highs. That correction now appears to have bottomed out, and the market is entering a period of stabilization that favors well-capitalized buyers.
As of Q1 2025, the direct vacancy rate in LA County stood at approximately 5.4%, up from 4.3% a year earlier but showing signs of leveling off. This represented a 25.2% year-over-year increase in vacancy, though the rate ticked down slightly from 5.5% in Q4 2024. While significantly higher than the sub-2% vacancy rates seen during the pandemic peak, 5.4% remains healthy by historical standards and well below levels that would signal distress.
Average asking rents have corrected from their 2022 peak but remain elevated compared to pre-pandemic levels. Triple net rents across the basin settled in the range of $1.35 to $1.44 per square foot in mid-2025, representing a decline of roughly 31% from the all-time highs but still reflecting projected annual growth of 3.8% when measured from 2022 forward. The correction has been most pronounced in Class B and C space, while modern Class A logistics facilities continue to command premium rents.
Leasing activity rebounded in the second half of 2025. Major deals included FedEx's 500,000-square-foot build-to-suit in Downey and multiple Amazon lease commitments across the basin, signaling that leading logistics users are investing in long-term capacity. Tariff-related uncertainty in mid-2025 briefly paused some deals, but the anticipated supply chain disruptions never materialized, and tenant demand strengthened after the initial shock subsided.
The Port of Los Angeles processed 960,597 TEUs (twenty-foot equivalent units) in August 2025 alone, a 16% surge year-over-year driven by tariff front-loading and ongoing infrastructure improvements. The port complex's $1.2 billion modernization project, which includes automated gate systems, expanded railyard capacity, and cranes for ultra-large container vessels, ensures that LA will remain the primary gateway for Pacific Rim trade. This port activity directly fuels demand for warehouse and distribution space throughout the region.
For borrowers and investors, the current market presents an attractive entry point. Asking prices have come down from their peaks, competition for deals has moderated, and the long-term demand drivers for LA industrial space remain intact. Securing financing now positions buyers to benefit as the market recovers.
Which Los Angeles Submarkets Are Best for Industrial Investment?
The greater Los Angeles industrial market spans an enormous geographic area, from the port waterfronts of San Pedro and Long Beach to the vast distribution corridors of the Inland Empire. Each submarket has distinct characteristics that influence property values, tenant profiles, and financing considerations.
South Bay and Port Corridor is the epicenter of LA's logistics economy. The cities of Carson, Compton, Torrance, and Gardena sit along the primary trucking routes connecting the Ports of Los Angeles and Long Beach to the region's distribution network. Warehouses in this corridor benefit from immediate port access and strong demand from freight forwarders, third-party logistics providers (3PLs), and import/export companies. Industrial rents in the South Bay range from $1.40 to $1.75 per square foot NNN for modern space, with older facilities trading at $1.10 to $1.35.
Vernon, Commerce, and the Central Manufacturing District form the historical heart of LA's industrial base. Vernon, a city of just 112 residents but over 1,800 businesses and 55,000 workers, is one of the most concentrated industrial zones in the country. The area specializes in food processing, garment manufacturing, metals fabrication, and cold storage. Properties here tend to be older but benefit from central location, rail access, and an established workforce. Investors targeting value-add opportunities in this corridor can find properties at lower price points with significant upside potential.
The Inland Empire Gateway (cities like Ontario, Rancho Cucamonga, Fontana, and Riverside) represents the natural extension of LA's logistics network. While technically in San Bernardino and Riverside counties, the Inland Empire is inextricably linked to the LA port complex and handles the bulk of regional distribution. Warehouse demand here grew 12% annually, with major deals like Bridge Logistics Properties' $174 million acquisition of a 1.1 million-square-foot facility in Fontana underscoring investor confidence. Rents are lower than in LA County proper, typically $0.85 to $1.15 NNN, but larger lot sizes and modern building stock attract major national tenants.
San Fernando Valley offers a mix of light industrial, flex space, and manufacturing facilities across cities like Van Nuys, Sun Valley, Chatsworth, and North Hollywood. The Valley's industrial base serves aerospace, entertainment production, and small-scale manufacturing. Properties tend to be smaller than in the South Bay or Inland Empire, appealing to owner-occupants and small business operators who may qualify for SBA financing.
Downtown Arts District and East LA have seen industrial properties caught between traditional warehouse use and creative/commercial conversion pressure. While some older industrial buildings have been converted to offices, studios, and retail, genuine industrial demand persists in adjacent areas like Boyle Heights and East Los Angeles. Investors should carefully evaluate zoning protections and conversion risk when financing properties in these transitional neighborhoods.
Mid-Cities Corridor (cities like Downey, Santa Fe Springs, Cerritos, and La Mirada) provides a strategic middle ground between the port and the Inland Empire. This corridor features a mature stock of mid-bay warehouses and distribution centers serving regional tenants. FedEx's major build-to-suit commitment in Downey highlights the ongoing appeal of this centrally located submarket.
What Types of Industrial Properties Can You Finance in Los Angeles?
Los Angeles's industrial market is remarkably diverse, encompassing everything from massive modern distribution centers to small manufacturing shops. Each property type has specific financing requirements and underwriting considerations that borrowers should understand before approaching lenders.
Warehouses and Distribution Centers are the dominant industrial property type in the LA basin. These facilities range from older concrete tilt-up buildings with 18- to 24-foot clear heights to modern Class A distribution centers with 36-foot or higher ceilings, cross-dock configurations, and ESFR sprinkler systems. Lenders evaluate these properties based on clear height, column spacing, dock-high doors, truck court depth, and proximity to freeway interchanges. Properties with modern specifications and strong tenant occupancy receive the most favorable financing terms.
Last-Mile Distribution Facilities have become critical to LA's logistics infrastructure. The region's 13 million residents and their expectations for rapid delivery have driven intense demand for smaller distribution points located within or adjacent to dense residential neighborhoods. These facilities, typically ranging from 20,000 to 100,000 square feet, command premium rents and attract strong institutional interest.
Cold Storage and Food Processing Facilities serve LA's massive food supply chain. The Vernon/Commerce corridor is one of the largest cold storage concentrations in the western United States, supporting everything from frozen food distribution to fresh produce handling. Nationally, 7.4 million square feet of new cold storage is under construction, and the U.S. cold storage market is projected to grow at a 13.8% compound annual rate through 2033. LA's position as a food import gateway and its large consumer base make it a prime market for cold storage investment. These facilities carry higher buildout costs ($150 to $250 per square foot for temperature-controlled environments) but generate premium rents of $1.75 to $3.00 per square foot NNN.
Manufacturing and Production Space supports LA's surprisingly robust manufacturing sector. Despite perceptions that manufacturing has left California, the LA metro area still employs over 350,000 manufacturing workers in industries including aerospace, food production, apparel, furniture, and advanced materials. Manufacturing facilities often require specialized infrastructure (heavy power, overhead cranes, chemical handling) that creates barriers to entry and supports stable occupancy.
Flex Space combines warehouse, office, and sometimes showroom functions in a single building. Common throughout the San Fernando Valley and the Mid-Cities corridor, flex properties attract smaller tenants in industries like technology, media production, and specialty distribution. While flex space commands higher per-square-foot rents than pure warehouse, the hybrid tenant base requires more nuanced underwriting.
What Loan Programs Are Available for LA Industrial Properties?
Financing an industrial property in the Los Angeles market requires selecting the right loan structure based on your property type, investment strategy, and financial profile. Clear House Lending offers a full range of programs suited to the LA industrial landscape.
Conventional Commercial Mortgages are the primary financing tool for stabilized industrial properties with established tenants and predictable cash flow. For LA warehouses with strong occupancy and creditworthy tenants, conventional loans currently start at approximately 6.22% for industrial properties, with most borrowers landing between 6.25% and 7.75% depending on leverage, tenant quality, and lease term. Loan-to-value ratios typically range from 65% to 75%, with terms of 5 to 10 years and 25-year amortization.
SBA Loans are particularly well-suited for the many owner-occupants in LA's industrial market. If you operate a manufacturing business, logistics company, food processing operation, or any other business that occupies industrial space, the SBA 7(a) program allows down payments as low as 10%. The SBA 504 program provides long-term fixed-rate financing ideal for larger acquisitions of owner-occupied industrial facilities. Learn more in our SBA loan guide for commercial real estate.
Bridge Loans are essential in LA's competitive industrial market. Well-priced industrial properties often attract multiple offers, and sellers favor buyers who can close quickly. Bridge financing provides the speed to close in 10 to 21 days while you stabilize the asset, execute a lease-up strategy, or arrange permanent financing. Bridge rates for industrial properties typically range from 7.50% to 10.50%. Read our complete bridge loan guide for details on structuring these transactions effectively.
DSCR Loans evaluate the property's rental income rather than the borrower's personal tax returns, making them popular among investors who own multiple industrial properties or have complex income situations. LA industrial properties with solid net operating income can qualify for DSCR financing with down payments of 20% to 35%. Use our DSCR calculator to estimate whether your property meets minimum coverage requirements.
Construction and Renovation Loans fund ground-up industrial development or major facility upgrades such as cold storage conversions, seismic retrofits, and warehouse modernization projects. Given the increasing scarcity of developable industrial land in LA County (and regulatory headwinds like AB 98 limiting new development in the Inland Empire), these loans support borrowers who are adding value to existing inventory. Expect 30% to 40% equity requirements and rates of 8% to 11%.
Ready to explore financing for your LA industrial property? Contact Clear House Lending for a personalized rate quote and loan structure recommendation.
What Are Current Interest Rates for Industrial Loans in Los Angeles?
As of early 2026, industrial property loan rates in Los Angeles reflect the broader interest rate environment alongside the specific risk profile of industrial assets. California commercial mortgage rates averaged approximately 5.11% for the strongest credits in January 2026, while industrial-specific rates started at 6.22%. Most borrowers should expect to land within a range determined by their specific deal characteristics.
Conventional industrial mortgages range from approximately 6.22% to 7.75%, with the best rates reserved for modern facilities with long-term leases to credit tenants and leverage at or below 65% LTV.
SBA 504 debenture rates sit around 5.64%, and SBA 7(a) rates range from 6.50% to 8.00%, making these programs attractive for owner-occupants seeking long-term fixed-rate financing.
Bridge loans for acquisitions and repositioning carry rates of 7.50% to 10.50%, reflecting the shorter terms and higher risk profile of transitional assets.
DSCR loans for investor-owned industrial properties range from 6.50% to 8.50%, with rates influenced by net operating income, location within the LA basin, lease terms, and borrower experience.
Hard money loans range from 9.00% to 12.75% and serve borrowers who need speed above all else or are working with properties that do not yet qualify for conventional financing.
To estimate your monthly payments and evaluate different financing scenarios, use our commercial mortgage calculator.
How Does the LA Industrial Market Compare to Other Major U.S. Markets?
Understanding how Los Angeles stacks up against other major industrial markets helps investors and borrowers evaluate the relative value proposition and make informed decisions about capital allocation.
LA's industrial vacancy rate of 5.4% sits below the national average of approximately 6.4%, though it is significantly higher than the sub-2% rates seen during the pandemic. Markets like Dallas, Phoenix, and Atlanta have experienced sharper vacancy increases due to massive new construction pipelines, while LA's limited developable land constrains new supply and provides structural protection against oversupply.
Rent levels in LA remain among the highest in the country. At $1.35 to $1.44 per square foot NNN, LA rents are roughly 40% above the national average of approximately $0.95 per square foot. Only the San Francisco Bay Area, Northern New Jersey, and New York City consistently command higher industrial rents. However, LA offers larger average building sizes and better truck access than these other high-cost markets.
The Inland Empire, while geographically adjacent, offers a distinct value proposition. Rents of $0.85 to $1.15 NNN are 30% to 40% below LA County levels, and building sizes often exceed 500,000 square feet. Bridge Logistics Properties' $174 million acquisition of a 1.1 million-square-foot facility in Fontana at roughly $158 per square foot illustrates the pricing premium that institutional investors are willing to pay for large-format distribution space in the region.
Cap rates for LA industrial properties range from 5.0% to 6.5%, compared to a national average of 6.0% to 7.5%. Investors accept compressed yields in exchange for the irreplaceable port proximity, limited new supply, and long-term rental growth trajectory.
What Unique Challenges Affect Industrial Financing in Los Angeles?
Borrowers pursuing industrial property financing in the LA market should be prepared for several region-specific challenges that can affect deal timelines, costs, and feasibility.
Seismic Risk and Structural Requirements are a reality for all commercial property in Southern California. Older industrial buildings, particularly unreinforced masonry structures built before modern building codes, may require seismic retrofits that add significant capital costs. Lenders typically require seismic risk assessments (Probable Maximum Loss reports) and may condition financing on retrofit work for buildings with PML scores above 20%. Budget $15 to $50 per square foot for seismic strengthening of older industrial facilities.
Environmental Contamination is common in LA's older industrial corridors. Decades of manufacturing activity in areas like Vernon, Commerce, and the Central Manufacturing District have left environmental legacies that require Phase I and Phase II assessments. Properties near the Los Angeles River, Dominguez Channel, or former oil field sites may carry remediation obligations. Lenders require environmental clearance before funding, and cleanup costs can range from modest to deal-breaking depending on the contaminant.
California Regulatory Environment adds layers of compliance that borrowers from other states may not expect. CEQA (California Environmental Quality Act) reviews can delay new development and major renovations. AB 98 restricts new warehouse development in certain Inland Empire communities, limiting the pipeline of new industrial supply. Energy efficiency mandates under Title 24 affect renovation scopes and costs.
Water and Power Infrastructure can be a limiting factor for certain industrial uses. Cold storage and manufacturing facilities with high power demands may face utility infrastructure constraints, particularly in older industrial parks. Water availability and discharge permits affect food processing and chemical handling operations.
High Land and Construction Costs in LA County mean that even modest industrial properties represent substantial capital commitments. A 50,000-square-foot warehouse in the South Bay at $300 per square foot represents a $15 million acquisition, requiring $3 million to $5.25 million in equity depending on the loan program. Ground-up development costs for modern industrial facilities run $200 to $350 per square foot, excluding land.
What Role Does the Port of LA Play in Industrial Financing Decisions?
The Ports of Los Angeles and Long Beach together form the San Pedro Bay Port Complex, the largest port operation in the Western Hemisphere. Understanding the port's influence on the industrial market is critical for financing decisions throughout the region.
Port volumes directly drive warehouse demand. The Port of LA's record-setting August 2025 volume of 960,597 TEUs represented a 16% year-over-year increase, largely driven by importers front-loading inventory ahead of potential tariff escalations. When port volumes surge, demand for nearby warehouse space spikes as importers need staging areas for incoming goods. Conversely, port slowdowns can temporarily soften demand in the closest corridors.
The port's $1.2 billion modernization program ensures long-term competitiveness. Automated gate systems reduce truck wait times, expanded railyard capacity connects directly to transcontinental freight networks, and new cranes accommodate the ultra-large container vessels that now dominate Pacific shipping routes. These investments reinforce LA's position as the primary U.S. gateway for Asian trade and support sustained demand for regional industrial space.
Lenders view port-adjacent industrial properties favorably because of this infrastructure moat. Properties within a 30-mile radius of the port complex benefit from structural demand that cannot be replicated in competing markets. Financing terms for well-located port-corridor warehouses tend to be more aggressive than for properties in secondary locations.
For industrial investors evaluating opportunities in the LA basin, proximity to port infrastructure should be a primary consideration. The closer a property sits to the ports and major trucking routes (I-710, I-110, I-405, SR-91), the stronger its long-term demand profile and the more favorable its financing terms will be.
Contact Clear House Lending to discuss how port proximity affects your specific financing scenario.
What Is the Outlook for LA Industrial Real Estate and Lending?
Several major trends are shaping the next chapter of Los Angeles's industrial market, with direct implications for property values and financing demand.
E-Commerce and Last-Mile Delivery continue to expand. U.S. retail e-commerce sales grew 6.2% from Q1 to Q2 2025, and LA's massive consumer population ensures that the region will remain one of the most important last-mile markets in the country. Demand for smaller distribution facilities within densely populated areas will continue to grow.
Nearshoring and Supply Chain Diversification are bringing new manufacturing and distribution activity to Southern California. Companies shifting production from Asia to Mexico increasingly route goods through LA's port complex, creating additional demand for cross-dock and transloading facilities.
Cold Storage Growth represents a significant opportunity. The U.S. cold storage market is projected to grow at 13.8% annually through 2033, driven by online grocery adoption and consumer demand for fresh and frozen food delivery. LA's existing cold storage infrastructure in Vernon and Commerce is aging and insufficient, creating opportunities for conversion and new development.
Supply Constraints Protect Values over the long term. AB 98 and local municipal resistance to new warehouse development in the Inland Empire, combined with scarce developable land in LA County, limit the pipeline of new industrial supply. This structural constraint supports property values and rental rates even during periods of economic softening.
Green Logistics and Electrification will drive capital investment into industrial buildings. California's aggressive emissions regulations, including the Advanced Clean Fleets rule requiring zero-emission truck transitions, will require charging infrastructure at warehouses and distribution centers. Properties equipped for electric vehicle fleets will command premium rents and attract favorable financing.
Frequently Asked Questions
What is the minimum down payment for an industrial property loan in Los Angeles?
The minimum down payment depends on the loan program. SBA 7(a) and SBA 504 loans allow owner-occupants to put down as little as 10% on industrial properties. Conventional commercial mortgages typically require 25% to 35% down, while DSCR loans for investment properties generally require 20% to 35%. Given LA industrial property prices of $200 to $400 per square foot, a 50,000-square-foot warehouse could require $1 million to $7 million in equity depending on location and loan type.
How long does it take to close an industrial property loan in Los Angeles?
Conventional commercial mortgages typically close in 45 to 60 days. SBA loans may take 60 to 90 days due to additional documentation requirements. Bridge loans can close in as little as 10 to 21 days, making them essential for competitive bidding situations. Environmental reviews can add 2 to 4 weeks if Phase II assessments are required, which is common in LA's older industrial corridors.
Can I finance a cold storage conversion or warehouse renovation in Los Angeles?
Yes. Construction and renovation loans are available for cold storage conversions, seismic retrofits, and warehouse modernization projects. These loans typically require 30% to 40% equity with interest-only payments during construction, followed by conversion to permanent financing. Cold storage buildout costs in LA run $150 to $250 per square foot for temperature-controlled environments. Lenders evaluate project feasibility, construction experience, and projected stabilized income.
What DSCR do lenders require for LA industrial properties?
Most lenders require a minimum debt service coverage ratio of 1.20x to 1.25x, meaning the property's net operating income must exceed annual debt payments by 20% to 25%. Well-located LA industrial properties with strong occupancy often achieve DSCR ratios of 1.35x or higher, which can result in better loan terms and higher leverage. Use our DSCR calculator to check your property's coverage ratio.
How do seismic requirements affect industrial property financing in LA?
Lenders require seismic risk assessments (Probable Maximum Loss reports) for all commercial properties in Southern California. Buildings with PML scores above 20% may require retrofit work as a condition of financing. Seismic retrofit costs for older industrial buildings typically range from $15 to $50 per square foot. Some lenders require earthquake insurance for properties in high-risk zones, adding to operating costs. Newer tilt-up construction generally meets current seismic standards and does not face these additional requirements.
Is the Inland Empire considered part of the LA industrial market for financing purposes?
Yes and no. While the Inland Empire is technically in San Bernardino and Riverside counties, lenders generally view it as part of the greater LA industrial ecosystem due to its direct connection to the port complex. Financing terms for Inland Empire industrial properties are comparable to LA County, though slightly lower property values and rents may affect loan sizing. The Inland Empire's larger building sizes and newer construction often simplify underwriting compared to older LA County facilities.
For more information about commercial real estate financing in Los Angeles, visit our comprehensive LA commercial loans guide. Ready to get started on your industrial property financing? Contact Clear House Lending today for expert guidance from our commercial lending team.