If you’ve spent any time reading the headlines lately, you probably think Los Angeles is one giant "For Lease" sign. It's a common vibe. The narrative is basically that everyone has fled to the Inland Empire and downtown is a ghost town. Honestly? That’s only about half the story, and the half people are missing is where the actual money is moving right now.
The reality of los angeles commercial real estate news in 2026 is less of a "crash" and more of a massive, painful, and fascinating identity crisis. We aren't just looking at empty offices; we're looking at a city being forced to figure out what it wants to be when the old rules don't work anymore.
The Office Ghost Town vs. The Trophy Hunt
Let's talk about the elephant in the room. The office market. If you look at the raw data from early 2026, the overall vacancy rate in LA County is hovering right around 25.1%. That's a record high. In Downtown LA (DTLA), it’s even grittier, with total availability—that’s vacant space plus stuff people want to sublease—hitting north of 36%.
But here is the weird part.
While the B-grade buildings on Wilshire are struggling to keep the lights on, "Trophy" properties are actually doing okay. Their vacancy is sitting way lower, around 13.6%. You've basically got this "flight to quality" where companies are downsizing their total square footage but spending more per foot to be in the "cool" building with the rooftop garden and the high-end gym. It’s like everyone decided if they have to come into an office, it better not feel like a cubicle farm from 1998.
Professional services and law firms are the ones carrying the torch here. They're rightsizing. They aren't leaving; they’re just getting smaller and fancier. Meanwhile, the tech and media sectors—the guys who used to gobble up creative office space in Culver City and Santa Monica—are still sort of in a "wait and see" mode, which is putting a serious chill on the Westside.
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The Industrial Cooling and the $5 Million Tax Headache
For years, industrial was the golden child. You couldn't find a warehouse in the South Bay or near the ports if your life depended on it. Well, that fever has broken. The industrial vacancy rate ticked up to 4.6% at the start of 2026.
That might sound low compared to office, but for LA, it’s the highest it’s been in a decade.
Landlords are finally sweating a little. Rents are down about 11% to 14% from the peaks we saw a couple of years ago. If you're a logistics firm looking for 50,000 square feet, you actually have leverage now. You can ask for concessions. You can negotiate. It’s a buyer’s—or at least a tenant’s—market for the first time in a long time.
Then there’s the Measure ULA situation. You’ve probably heard it called the "Mansion Tax," but that’s a bit of a misnomer because it hits commercial deals too. Any sale over $5.3 million gets hit with a 4% tax, and if you cross $10.6 million, that jumps to 5.5%.
Kinda brutal, right?
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Since it passed, it has raked in over $1 billion for the city. But it’s also been a massive speed bump for deal-making. Investors are looking at that 5.5% hit on the top line and just... walking away. Or they’re moving their capital to cities like Glendale or Burbank that don't have the tax. There is a huge push to get a repeal measure on the November 2026 ballot, and honestly, the commercial world is holding its breath for that.
Retail’s Survival and the Apartment Shortage
Believe it or not, retail is the surprise winner in recent los angeles commercial real estate news. Because nobody is building new shopping centers, the existing ones are filling up. People still want to go to the Grove. They still want to eat out.
We’re seeing "experiential" retail—think pickleball courts in old department stores or high-end dining in former banks—thriving. It’s not just about buying stuff anymore; it’s about having a reason to leave the house.
On the residential side, things are... complicated.
- Permitting for new homes was historically weak in 2025.
- Only about 8,714 homes were permitted citywide last year.
- We need way more than that.
The silver lining? Adaptive reuse is becoming the law of the land. LA just expanded its ordinance to make it easier to turn those empty office towers into apartments. It’s not a magic wand—converting a 1970s office building into a functional apartment complex is an expensive nightmare—but it’s one of the few ways the city can actually grow right now.
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The Interest Rate Pivot
The Federal Reserve finally started trimming rates late in 2025, and we’re expecting maybe one more cut in 2026. This is the "unlock" everyone has been waiting for. There’s a "maturity wall" of loans coming due this year. If rates stay too high, owners who bought in 2021 with cheap debt are going to be in a world of hurt when they try to refinance.
But with rates starting to settle into the 5% to 6% range for many commercial products, the bleeding is starting to slow. It's making those "distressed" deals—where an investor swoops in to buy a struggling building—actually pencil out.
Actionable Insights for the LA Market
If you’re looking at the LA landscape right now, don't just look at the vacancy signs. Look at where the infrastructure is going.
The 2026 FIFA World Cup and the upcoming 2028 Olympics are driving billions into transit and airport upgrades. These aren't just for tourists; they’re creating "nodes" of value. Areas like Inglewood, near the Intuit Dome and SoFi Stadium, are seeing a massive influx of hotel and mixed-use development because that's where the foot traffic is guaranteed.
The smart move right now?
Watch the "sublease" numbers. When those start to shrink, it means companies are finally committing to space again. Also, keep a close eye on those South Bay industrial pockets; the pricing reset there is creating some of the best entry points we’ve seen in years.
The market isn't dying; it's just being repriced. And for the folks with cash and a long-term view, that's usually when the best stories start.
Next Steps for You
- Track the Sublease Velocity: Check the quarterly reports from Newmark or Cushman & Wakefield specifically for "net absorption" in the Westside. If that turns positive, the bottom is officially in.
- Monitor the 2026 Ballot: Stay updated on the Howard Jarvis Taxpayers Association’s progress. If they successfully get a ULA repeal or cap on the ballot, expect a massive surge in transaction volume in the second half of the year.
- Audit Your Portfolio for Title 24: New energy standards went into effect on January 1st. If you own or are buying older stock, factor in those retrofit costs immediately, as they’ll hit your NOI harder than you think.