Commercial Real Estate Updates

Economic Data Impact on South Bay, August 2025

DnG Commercial Real Estate Agents:
Deborah Naumovski, South Bay Commercial Real Estate Agent
Gulshen Kaur, South Bay Commercial Real Estate Agent

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South Bay, LA: El Segundo – Torrance – Inglewood – Hawthorne – Gardena
Greater Los Angeles: Santa Monica – Culver City – Marina Del Rey

Every month brings new economic reports, market forecasts, and expert predictions. But here's what successful commercial real estate investors know: the numbers that matter most aren't the ones making headlines.

You've probably seen the headlines: "Inflation Rises to 2.9%," "Jobless Claims Hit Four-Year High," "Consumer Confidence Drops." If you own commercial real estate in Manhattan Beach, El Segundo, Torrance, or anywhere across the South Bay, these reports might leave you wondering what they actually mean for your property's value and your investment strategy.

Here's the truth: most economic data gets misinterpreted by commercial real estate investors. The numbers that dominate financial news often have little direct impact on local property markets, while the indicators that truly matter for South Bay commercial real estate rarely make front-page news.

As experienced commercial real estate agents who've guided South Bay property owners through multiple economic cycles, we've learned to separate the signal from the noise. Let's break down what economic data actually means for your commercial property investment, and why working with knowledgeable local agents makes all the difference.

The Economic Indicators That Actually Matter for Commercial Real Estate

Employment Data: Look Beyond the Headlines

When the Bureau of Labor Statistics releases monthly employment figures, most investors focus on the headline unemployment rate. But for commercial real estate owners, the details matter more than the topline number.

What to watch instead:

Local employment by sector: South Bay's economy depends heavily on aerospace, logistics, and technology. Boeing's employment levels in El Segundo matter more for local office demand than national unemployment rates.
Labor force participation rates: A declining participation rate can signal economic weakness even when unemployment appears stable.
Job quality metrics: Are new jobs full-time positions with benefits, or part-time gig work? This affects tenants' ability to pay rent and expand their businesses.

Real-world impact: When SpaceX expanded operations in Hawthorne, local industrial rents increased not because of national employment trends, but because of concentrated job growth in high-paying technical positions. Smart commercial real estate investors tracked aerospace employment data, not general unemployment figures.

Interest Rates: It's Not Just About the Fed

Everyone watches Federal Reserve announcements, but commercial real estate financing depends on multiple interest rate environments that don't always move together.

The rates that actually affect your property:

10-year Treasury yields: These drive long-term commercial mortgage rates more directly than Fed funds rates
Credit spreads: The difference between corporate bonds and Treasuries indicates lending appetite for commercial real estate
SOFR rates: The Secured Overnight Financing Rate affects many commercial loans more than traditional prime rates

Why this matters: In early 2024, the Fed held rates steady, but 10-year Treasury yields fluctuated based on inflation expectations and global events. Commercial real estate investors who understood this distinction could time refinancing and acquisition decisions more effectively.

Inflation: Which Numbers Actually Impact Your Bottom Line

The Consumer Price Index (CPI) gets all the attention, but commercial property owners need to track different inflation metrics.

Focus on these instead:

Commercial rent inflation: How are asking rents changing in your specific property type and location?
Construction cost inflation: Rising materials and labor costs affect new supply, which impacts your property's competitive position
Energy cost trends: Utility expenses directly affect your operating costs and tenant satisfaction

Local application: While national CPI showed 2.9% inflation in August 2025, commercial rents in prime South Bay locations increased at different rates. El Segundo industrial properties saw rent growth above national averages due to limited supply and strong tenant demand, while some retail categories remained flat.

The South Bay Economic Indicators You Should Actually Track

Port of Los Angeles Activity

The Port of Los Angeles handles about 20% of all U.S. container traffic, making it a leading indicator for South Bay commercial real estate demand. When port activity increases, demand for industrial and logistics space in Carson, Torrance, and surrounding areas typically follows within 6-12 months.

What to monitor:

Monthly container volume (Twenty-foot Equivalent Units - TEUs)
Import/export ratios
Average dwell time for containers

LAX Passenger and Cargo Volume

Los Angeles International Airport drives significant commercial real estate demand across the South Bay. Changes in passenger traffic affect hotel, retail, and office demand, while cargo volume impacts industrial property needs.

Key metrics:

Monthly passenger counts
Air cargo tonnage
New airline route announcements
Airport expansion project timelines

Local Building Permit Data

New construction permits provide early signals about future supply in your market. Unlike national housing starts, local permit data shows exactly what's coming online in your competitive set.

Track these by property type:

Industrial/warehouse permits in your submarket
Office building permits and square footage
Retail development approvals
Mixed-use project announcements

How to Interpret Economic Data for Investment Decisions

Context Matters More Than Individual Data Points

A single economic report rarely provides actionable investment guidance. Successful commercial real estate investors look for patterns across multiple indicators over time.

Example: Rising interest rates might seem negative for commercial real estate, but if they're rising because of strong economic growth that's driving tenant demand, the net effect on property values could be positive. Context determines impact.

Local Trends Often Override National Patterns

National economic data provides useful background, but local market conditions drive property performance. The South Bay's unique economic drivers are aerospace, logistics, entertainment, and technology. These drivers create patterns in commercial real estate that don't always match national trends.

Case study: During the 2020-2021 pandemic, national office markets struggled while South Bay aerospace and defense contractors maintained stable operations. Investors who focused on local employment data rather than national office market reports made better decisions.

Timing Lags Vary by Property Type

Different commercial property types respond to economic changes at different speeds:

Industrial properties: Often lead economic cycles due to inventory and logistics needs
Office buildings: Lag economic changes due to longer lease terms and slower decision-making
Retail properties: Fall somewhere in between, depending on tenant mix and lease structures

Common Mistakes Commercial Real Estate Investors
Make with Economic Data

Mistake #1: Overreacting to Monthly Volatility

Economic data is noisy. Monthly fluctuations often reflect seasonal patterns, data collection issues, or temporary events rather than meaningful trends.

Better approach:

Focus on three-month and six-month trends rather than month-to-month changes. Look for consistent patterns rather than dramatic single-month moves.

Mistake #2: Ignoring Leading vs. Lagging Indicators

Some economic metrics predict future conditions, while others confirm what already happened. Successful investors understand the difference.

Leading indicators for commercial real estate:

Building permits and construction starts
Business formation and expansion announcements
Employment in key local industries

Lagging indicators:

Unemployment rates
Retail sales figures
Most inflation measures

Mistake #3: Treating All Economic News as Equally Important

Not every economic report deserves the same attention. Focus your analysis on data that directly affects your property type and local market.

Priority framework:

Local employment and business activity in your area
Interest rates and credit availability for commercial real estate
Supply and demand indicators for your property type
National economic trends (for context only)

Why Working with Experienced Commercial

Real Estate Agents Matters

Understanding economic data is just the first step. Translating that understanding into successful investment decisions requires local market knowledge, transaction experience, and strategic thinking.

We Track the Right Indicators

At DnG Commercial Real Estate, we don't just read economic reports — we analyze the specific data points that affect South Bay commercial properties. We maintain relationships with local businesses, track development pipelines, and understand how national trends translate into local opportunities.

We Provide Context, Not Just Data

Anyone can find economic statistics online. The value comes from understanding what those numbers mean for your specific property and investment goals. We help you separate meaningful trends from temporary noise.

We Time Decisions Strategically

Economic data helps inform timing for buying, selling, refinancing, and leasing decisions. But timing requires more than data analysis; it requires understanding buyer behavior, lender appetite, and market psychology.

Your Action Plan for Using Economic Data Effectively

Step 1: Identify Your Key Indicators

Based on your property type and location, determine which economic metrics matter most for your investment performance. Focus your attention on these rather than trying to track everything.

Step 2: Establish Reliable Data Sources

Use consistent, reliable sources for your key indicators. Government agencies, industry associations, and local economic development organizations often provide the most accurate data.

Step 3: Look for Patterns, Not Headlines

Track your key indicators over time and look for sustained trends rather than reacting to individual data releases. Keep a simple spreadsheet or use economic tracking tools.

Step 4: Connect Data to Local Market Conditions

Always ask: "What does this mean for my specific market?" National trends provide context, but local conditions drive property performance.

Step 5: Work with Knowledgeable Local Professionals

Partner with commercial real estate agents who understand both economic analysis and local market dynamics. The combination of data interpretation and market knowledge creates the best investment outcomes.

Economic Trends to Watch in 2025-2026

Several economic trends deserve particular attention for South Bay commercial real estate investors:

Federal Reserve Policy Normalization

As the Fed continues cutting rates from current levels, watch for changes in commercial real estate lending standards and investor appetite for different property types.

Supply Chain Reshoring

Continued efforts to bring manufacturing and logistics operations closer to U.S. markets could benefit South Bay industrial properties, given our proximity to major ports and transportation infrastructure.

Aerospace and Defense Spending

Federal budget priorities and defense contractor activity significantly impact South Bay employment and commercial real estate demand. Track defense appropriations and major contract awards.

Technology Sector Evolution

Changes in the tech industry, from AI development to remote work patterns, affect office demand and industrial space needs for data centers and specialized facilities.

Data Drives Decisions, But Knowledge Drives Success

Economic data provides valuable insights for commercial real estate investors, but only when properly interpreted and applied to local market conditions. The most successful South Bay property owners we work with don't just track economic indicators. They see and we help them understand what those indicators mean for their specific investments and act accordingly.

At DnG Commercial Real Estate, we combine economic analysis with deep local market knowledge to help property owners make informed decisions. We track the indicators that matter, provide context for what the data means, and help you time your investment decisions strategically.

Whether you're considering selling, buying, or refinancing commercial property in the South Bay, understanding economic data is crucial. Understanding how to apply that data to your specific situation is what creates real lasting commercial property investment success.

Ready to discuss how current economic trends affect your commercial property strategy? Call Deborah Naumovski or Gulshen Kaur at (310) 999-1203. We're here to help you make sense of the data and make decisions with confidence.

Deborah Naumovski and Gulshen Kaur are commercial real estate agents who provide strategic guidance for commercial and residential property owners throughout Los Angeles' South Bay. Our experienced team combines economic analysis with local market expertise to help clients achieve their investment goals in El Segundo, Manhattan Beach, Torrance, Redondo Beach, Hawthorne, Carson, and surrounding communities. DnG is the Key.