Although the logistics and shipping industry appears more uncertain than in recent years, facing fluctuating tariffs, trade policies, and a diesel fuel crisis, various companies are investing in a more stable future. Increasingly, this means favouring ownership over renting. This dynamic is increasingly shaping the country's largest industrial market, Southern California.
Industrial end-users actively competed with investors in Southern California earlier this year, according to data from Smith Industrial Partners. Buyers were willing to pay a measurable premium for acquiring rather than renting, signalling continued long-term confidence in this asset class. Smith noted that tenants looking to buy consistently outbid institutional buyers to secure current occupancy costs. After the trading of vacant warehouses in the region increased last year, reducing some of the post-pandemic oversupply, sales volumes continued to rise.
Drivers of the Owner-Occupier Strategy
The trend towards transactions turning operators into owners stems from several overlapping developments, explained Erik Hanson, Senior Director for Capital Markets at JLL in San Francisco. Firstly, companies nationally have cash available and, after quarters of solid profits, have become more efficient, possess strong balance sheets, and the ability to deploy capital. Simultaneously, market volatility, exacerbated by recent interest rate hikes, signals to traditional institutional players that it is time to retreat. This opens the way for a different class of buyers. This gives owner-occupiers more leverage to acquire their properties.
At a time when companies are more concerned about disruptions than ever before, buying critical warehouse locations to ensure resilience and continuity appears to be a shrewd business move, according to Zac Rogers, Associate Professor of Operations and Supply Chain Management at Colorado State University. New capital investments might seem out of place in the current inflation and interest rate environment, but companies could be willing to consider purchasing their properties. This is particularly true given the more expensive alternatives. Rogers explained that the idea of being able to be a landlord, rather than just a tenant, is present in the minds of companies. The value of warehouse space, especially in a market like Los Angeles, is unlikely to decrease, which is why such a purchase can be presented to the board as a long-term investment.
Specific Examples and Market Assessments
Particularly in Southern California, owner-occupiers see the convergence of more attractive pricing and the central importance of industrial space on the Californian coast for their own operations as reasons to buy rather than rent now. Last November, manufacturer Future Foam acquired two buildings spanning 417,000 square feet for USD 145 million, opting for ownership as its lease expired. Chinese company Jiaherb acquired a warehouse in Orange County from AEW Capital Management for USD 53.7 million in June. In the same month, Holland Flower Market invested USD 34 million for a warehouse in City of Commerce, L.A. County. L.A.-based owner Rexford Industrial has seen an increase in tenants becoming buyers over the past two years.
Laura Clark, CEO of Rexford, said owner-occupiers saw what Rexford also saw: well-located infill buildings are hard to replace. These companies and owners needed to be based in Southern California to serve their customers, so owning their building secured both their location and their costs. In July, Rexford announced a portfolio rebalancing with plans to sell USD 2 billion worth of properties, and has already completed transactions worth approximately USD 1.5 billion this year, with EQT acquiring the majority of these sites. Clark emphasised that Rexford Industrial’s long-held conviction remains: assets in Southern California, one of the world's largest consumer markets, continue to be in demand and are at a multi-decade low in supply, at a time when barriers to market entry pose significant challenges.
- —Private bidding volume for industrial facilities increased by 19 percent year-on-year, reaching USD 36.2 billion by August 2026.
- —This represents an increase of over USD 6 billion compared to the same period last year.
- —Private and high-net-worth individuals, including family offices, accounted for 46.3 percent of all industrial transactions in the first half of 2026.
The retreat of institutional buyers in the industrial sector was also noticeable. JLL recorded an increase in private capital in national industrial transactions this year. Both owner-occupiers and these private buyers tend to view these assets and investments through a similar lens. As Hanson explained, both private capital and operators do not just look at the next three to five years. Since industrial properties tend to outperform traditional asset classes like offices – and a more robust future demand is assumed – a purchase with a longer-term holding makes more sense. With this long-term perspective in mind, the ability to acquire an asset currently trading at a 15 or 20 percent discount to replacement cost makes the timing attractive.
Caitlin Barrozo, Research Manager at Savills, believes the industrial market in Los Angeles has bottomed out, making pricing particularly attractive. NAI noted that industrial property sales prices in Southern California have fallen by 16 to 27 percent year-on-year, creating opportunities for owner-occupiers despite higher interest rates. Hanson commented that the best returns in real estate arise during periods of market disruption.
