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Defense funding boosts South Bay industrial leasing in Los Angeles
Aerospace and defense tenants rose to 11% of greater LA industrial leasing since Q2, helping push LA leasing activity to 15.7M SF in the quarter.
Aerospace and defense tech firms are expanding in Los Angeles’ South Bay industrial market, with increased federal funding supporting companies that operate in or supply the sector, Newmark head of Southwest research Dain Fedora said, according to Bisnow.
Bisnow reports that aerospace and defense users accounted for just 2% of greater LA industrial leasing activity in spaces of 100K SF or more between 2015 and 2024. As of the second quarter, their share rose to 11%, while third-party logistics remained the largest group at 25% of leases since 2025, with a steady share over time.
The South Bay has also become a disproportionate driver of leasing, the outlet said. From 2010 through the first half of 2026, the submarket accounted for 34% of LA industrial leases, and in the second quarter it represented 42%, according to Newmark data.
Overall, Bisnow notes that Los Angeles industrial leasing activity totaled 15.7M SF in Q2, up 40.4% year over year and 7.6% from the prior quarter, with net absorption of 2.9M SF. Vacancy fell 20 basis points to 3.9% as two major aerospace and defense leases in the South Bay, Valar Atomics’ 512K SF in Torrance and Divergent Tech’s roughly 400K SF in Long Beach, led the quarter by square footage.