Stronger April Jobs Report Fuels Optimism for Stabilizing SoCal Industrial Markets

Transportation and warehousing hiring shows early stabilization, but rising vacancy and softer rents across Los Angeles County, Inland Empire, Orange County, and Ventura County signal continued market correction as supply pressure begins to ease.

April’s upside jobs surprise comes as Southern California industrial fundamentals transition through improved leasing and contracting construction pipelines.

The U.S. economy added more jobs than expected in April, with the Bureau of Labor Statistics reporting 115,000 new nonfarm payroll positions, surpassing economists’ consensus estimate of roughly 55,000. The unemployment rate held at 4.3%, consistent with a labor market cooling gradually without deteriorating.

On the industrial front, the jobs data offered a mixed but encouraging read. Transportation and warehousing added 30,300 positions in April, led by couriers and messengers (+38,000) and truck transportation (+4,300), partially offset by a decline in transit and ground passenger transportation (-7,500). The sector’s broader trajectory, however, remains a headwind: transportation and warehousing employment is down 105,000 since peaking in February 2025, a contraction that tracks closely with rising vacancy across Southern California’s industrial markets.

​What It Means for Southern California Industrial

Southern California’s industrial market continues to absorb the consequences of that demand pullback. Regional vacancy climbed to 7.3% this quarter from 7.2% last quarter and 6.4% a year ago, a 90 basis point increase year-over-year that reflects the sector’s ongoing recalibration after the pandemic-era surge in logistics demand. Total available industrial space now stands at approximately 191 million square feet across the region, up 8.1% from a year ago. 

Average asking rents softened to $1.23/SF NNN regionally, down 0.8% quarter-over-quarter and 4.5% year-over-year, as landlords adjust to a more tenant-favorable environment. Leasing volume of 26.2 million square feet was up 16.1% quarter-over-quarter, a welcome sign of renewed activity, though still down 14.8% from a year ago.

One potentially stabilizing factor is the sharp pullback in new supply. Regional industrial construction under way totals 14.4 million square feet, down 1.2% from last quarter and 37.2% from a year ago, when 23.0 million square feet was in the pipeline. Completions tell a similar story, with 2.9 million square feet delivered this quarter, down 30.0% quarter-over-quarter and 37.2% year-over-year. With the development pipeline contracting meaningfully, the supply pressure that has weighed on rents and vacancy should begin to ease as existing space is gradually absorbed.

Los Angeles County vacancy rose to 6.6% from 6.2% last quarter and 5.9% a year ago, a 70 basis point year-over-year increase. Available space totals 73.9 million square feet, up 4.3% annually. Leasing volume of 10.6 million square feet was up 17.8% from last quarter, though rents softened to $1.38/SF NNN, down 2.1% quarter-over-quarter and 6.8% year-over-year. Under construction totals 2.6 million square feet, down 53.5% from a year ago when 5.5 million square feet was underway, a significant supply reduction that should support stabilization over time. Sale volume of $1.6 billion was up 50.4% quarter-over-quarter, suggesting investor appetite remains for well-located product despite leasing headwinds.

The Inland Empire, the region’s once fastest growing industrial market at 756.9 million square feet, saw vacancy ease slightly to 8.8% from 9.0% last quarter, though it remains well above the 7.7% recorded a year ago, a 110 basis point year-over-year increase. Available space totals 95.8 million square feet. Leasing volume improved 8.7% quarter-over-quarter to 12.6 million square feet, though it remains down 24.3% year-over-year. Rents of $0.95/SF NNN are down 4.0% quarter-over-quarter and 7.8% year-over-year, the steepest rent decline in the region. Under construction stands at 10.2 million square feet, down 34.0% from 15.5 million square feet a year ago, the largest reduction in the pipeline across all Southern California markets.

Orange County posted vacancy of 6.1%, up from 6.0% last quarter and 5.4% a year ago, a 70 basis point year-over-year increase. Leasing volume surged 53.3% quarter-over-quarter to 2.6 million square feet, a bright spot in an otherwise softening rent environment. Average asking rents of $1.49/SF NNN are down 1.3% quarter-over-quarter and 3.9% year-over-year. Under construction fell to 761,000 square feet, down 42.2% from last quarter and 58.6% from a year ago, the steepest percentage decline in the pipeline in the region.

​Ventura County remains the region’s tightest market with vacancy of just 3.0%, unchanged from last quarter though up from 2.4% a year ago. Leasing volume jumped 42.6% quarter-over-quarter to 335,840 square feet, and rents of $1.09/SF NNN are up 4.8% from last quarter and essentially flat year-over-year at 0.9%, the only market in the region to hold rents steady on an annual basis. Under construction of 892,000 square feet is up sharply from just 149,000 square feet a year ago, reflecting developer confidence in the market’s tight fundamentals.

​​Outlook

The April uptick in courier and truck transportation hiring offers a measured dose of optimism for industrial demand, particularly for last-mile and logistics-oriented product. But with sector employment still 105,000 below its February 2025 peak, the recovery has ground to cover before it translates into meaningful absorption. Leasing activity picking up quarter-over-quarter across all four markets is an encouraging leading indicator, and the sharp year-over-year decline in construction activity across the region suggests the supply overhang may be nearing its peak, offering a longer-term tailwind for landlords if demand stabilizes.

​Whether that momentum holds through the balance of 2026 is a Trends to Watch, with the conflict in Iran and ongoing tariff negotiations complicating the outlook for trade-dependent industrial markets. April CPI rose 3.8% year-over-year and 0.6% month-over-month, driven in part by a 17.9% surge in energy costs, with gasoline prices up 28.4% over the past 12 months, adding cost pressure for logistics operators and introducing further uncertainty into occupier decision-making across the region.