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South Bay hubs drive defense tech demand and real estate conversion
A record $153 billion defense spending package and about $70 billion in U.S. defense tech venture funding over the last four quarters are helping fuel demand for port-adjacent industrial space in Southern California.
Commercial Observer highlights how persistent geopolitical instability and high-tech military needs are boosting defense spending, with Southern California, especially the South Bay communities of Torrance, Hawthorne, Long Beach, and El Segundo, seeing port-adjacent warehouse spaces converted into military manufacturing hubs.
The outlet attributes the shift to accelerating defense tech activity, noting that Los Angeles County took in the most direct Department of Defense contracts in the U.S. in 2025, and that Greater L.A. received $8.9 billion in federal funding, which it says catalyzed growth in startups and weapons manufacturing.
Commercial Observer also cites government and capital funding as key tailwinds, including a bill that appropriated $153 billion for defense spending last summer and a proposed $1.5 trillion spending level for next year, alongside Pitchbook data showing U.S. defense tech venture capital of about $70 billion over the last four quarters, a 63 percent increase versus the prior four quarters.
For commercial real estate operators, JLL managing director Mac Burridge described the South Bay growth as unprecedented, comparing it to Inland Empire conditions during COVID, while pointing to limited space availability as demand rises.