Earnings Pulse: What Prologis & Rexford Just Told Us About SoCal Industrial
Earnings calls provide great opportunities to learn from the most sophisticated industrial real estate owners in the United States and in Southern California. We mesh that with insights from CoStar research reports and our interview with their head of region to bring to you the best analysis on Q2 to lead us to make better decision in Q3 & Q4.
Market Pulse — Earnings Season Edition
Prologis Q2 ‘25 Call – “Short‑term pain, long‑term gain.”
CEO Hamid Moghadam noted SoCal’s sharp negative absorption, yet their regional portfolio is still 95 % leased with occupancy down only 20 bps (95.5 → 95.3 %). June leasing spiked and PLD’s company‑wide pipeline hit an all‑time high, suggesting pent‑up demand once tariff fog lifts. Key take‑aways: * Renewals = 75 % of Q2 volume. Cap‑ex‑shy users are extending 2–3 yrs while they wait for clarity. * Tariffs, not consumers, are the drag. Management expects a “snap‑back” once policy stabilizes. * Starts are scarce. Replacement‑cost rents keep climbing; vacancy should re‑tighten toward the 5 % pricing‑power line over 12‑24 mos. * June proposals from tenants starting to increase again giving early signs of pent up demand going into Q3
Rexford Industrial Q2 ‘25 Call – “Occupancy first, price second.”
91.6 % leased with activity on 80 % of remaining vacancies. Early renewals (1.1 MSF YTD) are double last year’s pace. * Landlords are trading rate for term to fill space now; concessions are on the table. * * Smaller renewals + longer downtime for big boxes means 2026 rollover risk is shrinking, act before leverage swings back.
Bottom line: SoCal industrial is “on sale,” but for how long is difficult to predict. Could it get worse before it gets better, or is this the bottom and we bumble around the bottom for a few quarters? That's the big question.
Data Watch — CoStar Inland Empire Flash
July 11 Insight by CoStar’s top So Cal market rep Jesse Gundersheim shows ‑4 MSF net absorption for the Inland Empire in Q2 — the steepest quarterly loss in the nation. IE vacancy hit 8 % (15‑yr high) as Home Depot, Kohl’s, Harbor Freight & multiple 3PLs shed >500 KSF blocks. Construction starts, however, have plunged, suggesting supply pressure will abate next year.
Translation: We’re likely at least two quarters from the bottom, and well‑capitalized users are already cherry‑picking second‑generation space.
Featured Opportunities
Asset Offering Snapshot Link For Sale Multi-Tenant Industrial Park 325‑355 S Schnoor Ave, Madera, CA Newly delivered 2023, 144,300 SF multi‑tenant park, 74 suites (avg. 1,950 SF). 88 % occupied; Each unit has fenced yard, roll‑up & private office. OM Sublease 1400 Manhattan Ave, Fullerton, CA 102,016 SF freestanding (22' clear, ESFR, 1,200 A power). Term through 4/30/2028, 50 trailer stalls or excess employee parking. Flyer Video Off Market Sale 1755 Brown Ave, Riverside 22.1 AC M‑2 heavy‑manufacturing campus w/ dual steel buildings (≈140 KSF under roof), 66 kV sub‑station, 4” gas line, UP rail, full block wall & electrified fence. Ideal for large‑scale recycling or value‑add covered‑land play. Teaser
Need sizing, pricing or a tour? Hit reply and we’ll fast‑track details.
Podcast Spotlight
“Behind the Numbers” – I sat down with Jesse Gundersheim, CoStar’s SoCal industrial lead, to unpack: * Vacancy by size tranche (sub‑50 KSF vs. 500 KSF +) * Median months‑on‑market & where rents are actually clearing * Logistics absorption vs. population shifts
▶ Watch on YouTube 🎧 Listen on Apple Podcasts
Your Next Step
Supply‑chain shifts, tariff chess, rate volatility—2025 is a moving target. Whether you’re: * Renewing to buy time * Right‑sizing footprint & automation plans * Acquiring investments that have worthy return thresholds
…our team translates macro signals into site‑level strategy. Call, text or drop 15 min on my calendar and let’s map options before Q3 heats up.
Best Regards,
Justin
Justin Smith, SIOR MBA, MRED, MCR, MSCM Candidate Senior Vice President | Principal Lee & Associates | Irvine
D 949.790.3151 C 949.400.4786 O 949.727.1200 jbsmith@lee-associates.com (mailto:jbsmith@lee-associates.com) ____________________________________
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