At a glance
- Users paid what the report calls a measurable premium to own rather than lease, which it reads as a signal that long-term confidence in the asset class remains intact.
- The report describes logistics and shipping as more uncertain than they have been in years, with shifting tariffs and trade policy compounded by a diesel fuel crisis.
- Erik Hanson, a senior director of capital markets at JLL in San Francisco, points to company balance sheets first.
Warehouse occupiers in Southern California competed directly with investors for buildings early this year and consistently paid more than the institutions, according to Smith Industrial Partners data reported by Commercial Observer.
Users paid what the report calls a measurable premium to own rather than lease, which it reads as a signal that long-term confidence in the asset class remains intact. The stated motive is occupancy cost: a company that buys locks in what it would otherwise pay a landlord.
The report describes logistics and shipping as more uncertain than they have been in years, with shifting tariffs and trade policy compounded by a diesel fuel crisis. Trading in vacant warehouses across the region rose last year, eating into some of the post-pandemic glut, and sales volumes have kept rising, according to the report. It calls Southern California the nation's largest industrial market.
Erik Hanson, a senior director of capital markets at JLL in San Francisco, points to company balance sheets first. Nationally, firms have dry powder, and after quarters of solid profits they are leaner and able to deploy capital, he said. The choppiness of the market, made worse by recent interest rate increases, is simultaneously telling traditional institutional buyers to pull back, which opens the lane for a different class of buyer. "It all gives owner-users more leverage to win and buy their real estate," Hanson said.
Zac Rogers, an associate professor of operations and supply chain management at Colorado State University, frames the purchase as a continuity decision. Buying key warehouse locations to guarantee resilience and continuity looks like smart business at a moment when companies are more worried about disruption, he said, even if new capital investment may seem fanciful in the current inflation and interest rate environment. "In the back of their minds, they think that instead of being a tenant, we could be a landlord," Rogers said. "The value of storage space, especially in a market like Los Angeles, is probably not going to go down, and so you can also probably sell this purchase to a board as a long-term investment."
Last November, manufacturer Future Foam spent $145 million acquiring two buildings, according to the report. That purchase came months before the early-2026 stretch Smith measured.
Reported by the Sectors desk from Commercial Observer. Published . Corrections