Kidder Mathews reports that the 124-million-square-foot submarket recorded more than 636,000 square feet of occupancy losses during the quarter, while asking rents slipped 3.2 percent year over year
The San Fernando Valley industrial market posted its weakest quarterly absorption figure in recent memory during the first quarter of 2026, as tenants gave back more than 636,000 square feet of space across the submarket’s four geographic zones. The pullback pushed the direct vacancy rate to 5 percent, up 110 basis points from the same period a year earlier and 60 basis points above the prior quarter, according to Kidder Mathews’ first-quarter market report.
The data marks a notable deterioration from conditions just 12 months ago, when vacancy sat at a comparatively tight 3.9 percent. Kidder Mathews, the largest fully independent commercial real estate firm in the Western United States, tracks the San Fernando Valley across four submarkets encompassing approximately 124.1 million square feet of total industrial inventory.
The East San Fernando Valley, the submarket’s largest zone at 53.1 million square feet, bore the heaviest burden, recording negative 378,552 square feet of net absorption during the quarter. That submarket’s direct vacancy rate reached 5.4 percent, while its total vacancy rate climbed to 6.1 percent. The West San Fernando Valley, which contains 47.6 million square feet of inventory, posted negative 230,104 square feet of absorption and saw its direct vacancy rate rise to 5.2 percent. Even the tighter Glendale submarket, where vacancy remains a low 1.8 percent, recorded negative 33,701 square feet of absorption. Only Burbank managed a modest positive reading at 5,749 square feet.
Asking lease rates continued to soften. The average asking rent across the valley fell to $1.52 per square foot per month on a triple-net basis, a decline of 3.2 percent from $1.57 a year earlier. Glendale commanded the highest rents at $2.14 per square foot, followed by Burbank at $1.87. The West San Fernando Valley trailed at $1.44 per square foot, reflecting softer demand in the submarket’s larger-footprint logistics corridors.
Leasing activity totaled 970,657 square feet during the quarter, a 20.5 percent decline from the 1.2 million square feet transacted during the first quarter of 2025. The West San Fernando Valley accounted for more than half of leasing volume at 508,425 square feet, led by an 83,838-square-foot lease at 27349 Agoura Road to an undisclosed tenant in February. Two additional West Valley transactions — a 62,400-square-foot lease at 20401 Prairie Street and a 59,157-square-foot deal at 21123 Nordhoff Street — rounded out the quarter’s largest lease signings. Sale transaction volume also declined, falling 9.8 percent year over year to 571,597 square feet.
The quarter’s marquee investment transaction was CIRE Equity’s $116 million acquisition of a two-building industrial campus at 8201-8221 Woodley Avenue and 16200 Roscoe Boulevard in Van Nuys, totaling 304,774 square feet. The deal priced at approximately $380.61 per square foot. CIRE Equity, a San Diego-based private equity firm, purchased the fully leased portfolio from Link Logistics, Blackstone’s industrial subsidiary. PGIM Real Estate provided $136.5 million in acquisition financing for the transaction. The campus sits on 19 acres near Van Nuys Airport along Interstate 405, positioning the asset within one of the valley’s most established industrial corridors. Two additional sales rounded out the quarter’s notable transactions: a 47,056-square-foot property at 2231-2249 N Hollywood Way in Burbank traded for $14.98 million, or $318.34 per square foot, and a 38,500-square-foot building at 13042 Bradley Avenue in the East Valley sold for $8 million at $207.79 per square foot.
On the development front, Xebec Realty’s two projects in Sylmar represent the only significant construction activity in the valley. A 440,000-square-foot warehouse at 15825 Roxford Street is scheduled for delivery in the fourth quarter of 2026, while a smaller 87,010-square-foot facility at 15191 Bledsoe Street is expected to deliver in the second quarter. Both projects sit in the East San Fernando Valley submarket, which currently has 527,010 square feet under construction — the entirety of the valley’s active development pipeline. The West San Fernando Valley completed 91,950 square feet of new construction during the quarter, the only deliveries recorded marketwide.
The San Fernando Valley’s trajectory mirrors broader softening across the greater Los Angeles industrial market. Savills reported in its first-quarter 2026 Los Angeles industrial report that the metro area recorded 632,511 square feet of negative net absorption during the period, with the San Fernando Valley cited as one of the primary drivers of occupancy losses alongside the San Gabriel Valley and Central Los Angeles. Across the broader Los Angeles market, Kidder Mathews reported that direct vacancy edged up to 5.9 percent in the first quarter, while asking rents settled at $1.39 per square foot, reflecting an 8.6 percent year-over-year decline. Cushman and Wakefield noted in its first-quarter MarketBeat that vacancy across the Los Angeles industrial market remained elevated but showed early signs of stabilization as 2026 began.
Despite the softening metrics, the San Fernando Valley’s fundamentals remain anchored by its infill character and constrained supply pipeline. With only 527,010 square feet under construction in a market of more than 124 million square feet, the development pipeline represents just 0.4 percent of total inventory — a fraction that suggests available space will tighten once demand normalizes. Whether that recovery materializes will depend in part on the resolution of trade policy uncertainty and the trajectory of transportation costs, both of which have weighed on logistics tenants’ expansion decisions in recent quarters.
