Reducing Tenancy in a Tenant Leaning Market

​The Mid-Counties market along the Los Angeles and Orange County border features approximately 125M SqFt of industrial space.  Over the past 20 years, the area has generally been defined by scarcity of developable land, lower than average vacancy and steady occupant demand (resulting from proximity to ports, freeways and other transportation routes), creating one of the most landlord-favorable environments in Southern California. However, over the past 24+ months, the market has shifted toward a more historically balanced dynamic, with vacancy in the more normalized 6% +/- range for this region.

Although Base Rents for new leases have come down considerably from the peaks of 2022, furthered by real stagnation of tenant decisions for much of 2025, leasing velocity has now increased in Q1 2026, most notably in buildings less than 100,000 SqFt. Available inventory remains abundant, and in this environment, execution of a marketing strategy plays a much larger role in determining leasing success.

The Mid-Counties tenant base is now primarily composed of light manufacturers and assembly, distributors, and service-oriented businesses. Tenants in the marketplace looking to secure a new location are seeking opportunity.  This opportunity may come in the form of improving the quality or functionality of their facility, or it may come in the form of financial benefit or cost savings.

Therefore, it is vital for landlords to both understand what they have to offer the market, and the mindset of the prospective tenants looking at their facility.  We have explored numerous different strategies with our clients over the years based on these different factors, and their overall strategy in general.  Creativity and flexibility has become a critical competitive advantage.

Landlords who can provide attractive lease incentive programs will have an advantage, even if they offer a superior quality property.

For older buildings, tenant improvements (TI’s) are generally going to help the marketability and reduce vacancy time. Many of the older buildings requires upgrades or cosmetic improvements, while construction costs are generally not budgeted for by many tenants in the sub-100,000 SqFt size range.  Landlords who properly position their space with upgrades such as office paint and flooring, lighting or functional improvements will accelerate lease up timing.
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In conclusion, if you are considering leasing a property today, contact us to discuss the different strategies and opportunities at your fingertips.