Commercial Real Estate Updates
Navigating Tariffs, Inflation, and Opportunity: What Los Angeles Commercial Real Estate Investors Need to Know in 2025
By Deborah Naumovski & Gulshen Kaur of DnG Commercial Real Estate
Commercial Real Estate Agents, Los Angeles & South Bay
Go to:
South Bay, LA: El Segundo – Torrance – Inglewood – Hawthorne – Gardena
Greater Los Angeles: Santa Monica – Culver City – Marina Del Rey
A Shifting Economic Landscape
As trusted commercial real estate agents in Los Angeles and the South Bay, we at DnG know that our clients—property owners, investors, and business operators—are always watching the economic horizon. The latest news on rising import and export costs, driven by new tariffs and shifting global trade policies, is more than just a headline. It’s a signal that the commercial real estate market in Los Angeles is entering a new phase, one that demands both caution and creativity.
​
In this article, we break down what these changes mean for commercial real estate investors in Los Angeles and the South Bay. We’ll explain the most relevant data, connect the dots to local market dynamics, and offer actionable advice for navigating the months ahead.
Tariffs, Import Costs, and Inflation
In early 2025, the Trump administration’s new round of tariffs, has already begun to affect the U.S. economy. According to the Bureau of Labor Statistics, import prices rose 0.4% in February, with annual growth now at 2%. Notably, finished metals saw a 3.8% monthly jump, and durable industrial supplies are up 8.6% year-over-year.
​
For Los Angeles, a city whose port complex (the Port of Los Angeles and Port of Long Beach) handles over 40% of all U.S. containerized imports, these numbers are not abstract. They directly affect the cost of goods, construction materials, and the bottom line for businesses and property owners alike.
Why This Matters for Los Angeles Commercial Real Estate
Construction Costs and Project Viability
For developers and investors in Los Angeles and the South Bay, this can impact everything from ground-up office buildings to industrial warehouse retrofits.
​
-
Steel and Aluminum: With a 25% tariff now in place, and finished metals up 16% year-over-year, expect bids for new construction and major renovations to rise. This could delay projects, squeeze margins, or even shelve some developments altogether.
-
Industrial Supplies: The 8.6% annual increase in durable industrial supply prices will be felt in everything from HVAC systems to elevators and fixtures.
​Tenant Pressures and Lease Negotiations
Many tenants—especially those in manufacturing, logistics, and retail—are already feeling the pinch from higher import costs. This can lead to:
​
-
Requests for Rent Relief: Tenants facing higher input costs may seek concessions or shorter lease terms.
-
Shifting Demand: Some businesses may delay expansion or downsize, impacting occupancy rates in certain sectors.
​
​
​
​
​
​
Export Opportunities and Industrial Demand
On the flip side, American exporters to Canada and Mexico are seeing increased demand as trading partners rush to buy ahead of retaliatory tariffs. For Los Angeles, this is especially relevant for:
​
-
Industrial Properties: Warehouses and logistics centers near the ports are in high demand as companies front-load inventory.
-
Export-Oriented Businesses: Properties leased to exporters may see increased activity and higher rents.
​
​
​
​
​Consumer Confidence and Retail Real Estate
The Conference Board reports that consumer confidence has fallen for four consecutive months, hitting a 12-year low in future expectations. For retail property owners, this is a warning sign:
​
-
Potential Slowdown in Retail Leasing: Lower consumer confidence can translate to slower retail sales, which may impact tenant stability and demand for retail space.
-
Opportunities in Value-Oriented Retail: Discount retailers and essential services may outperform, creating opportunities for repositioning assets.​
​
Local Data: Los Angeles and South Bay Market Trends
Port Activity and Industrial Demand
-
The twin ports of Los Angeles and Long Beach remain the busiest in the nation. According to the Port of Los Angeles, container volumes in Q1 2025 are up 3% year-over-year, driven by pre-tariff inventory building. This has kept industrial vacancy rates in the South Bay below 2%, with rents rising 6% over the past year (LAEDC, Port of LA).
​
Construction Pipeline
-
Despite higher costs, Los Angeles still has over 10 million square feet of industrial and office space under construction as of spring 2025. However, several projects have reported delays or cost overruns due to material price spikes (CoStar, CBRE).
​
Retail and Office Trends
-
Retail leasing has slowed, especially in discretionary categories, but demand for medical, grocery, and service-oriented retail remains strong. Office leasing is steady in the South Bay, with tech and creative tenants leading demand, but landlords are offering more concessions to attract and retain tenants.
What Should Los Angeles Commercial Real Estate Investors Do Now?
1. Reassess Construction Budgets and Timelines
-
If you’re planning a new development or major renovation, revisit your budgets. Factor in higher material costs and potential delays. Consider value engineering or phasing projects to manage risk.
​
2. Diversify Tenant Mix
-
Properties with a diverse tenant base—especially those including essential services, exporters, or logistics firms—are better positioned to weather economic uncertainty. If you own retail or industrial assets, look for tenants less exposed to import cost volatility.
​
3. Monitor Lease Structures
-
Consider shorter lease terms or flexible renewal options to accommodate tenants facing uncertainty. For new leases, build in escalation clauses that account for inflation and rising costs.
​
4. Stay Informed on Policy Changes
-
Tariff policies are evolving, and some trading partners may be spared the full brunt of new tariffs. Stay in close contact with your commercial real estate agents (like DnG!) for the latest updates and market intelligence.
​
5. Watch Consumer and Business Confidence
-
Falling confidence can signal a slowdown in leasing and investment. Monitor local retail sales, small business optimism, and employment trends to anticipate shifts in demand.
The DnG Advantage: Local Expertise in a Global Market
At DnG, we combine nearly 20 years of experience as commercial real estate agents in Los Angeles and the South Bay. We understand how global trends—from tariffs to inflation—play out on the ground, in your neighborhood, and in your portfolio.
​
Our approach is hands-on, data-driven, and always focused on your success. Whether you’re a property owner seeking stable tenants, an investor looking to expand your holdings, or a business searching for the perfect location, we’re here to help you navigate uncertainty and seize opportunity.
Frequently asked questions
Stay Proactive, Stay Informed
The commercial real estate market in Los Angeles and the South Bay is resilient, but not immune to global economic shifts. As your commercial real estate agents, we’re committed to keeping you informed, prepared, and positioned for success—no matter what the headlines say.
​
If you have questions about your property, your portfolio, or the market, call us today at (310) 999-1203. DnG is the key to all your real estate needs.​
About DnG Commercial Real Estate Agents
Deborah Naumovski and Gulshen Kaur are leading commercial real estate agents serving Los Angeles and the South Bay. With nearly 20 years of combined experience, DnG delivers expert guidance, warm service, and a proven track record of successful transactions for investors, owners, and businesses.
​
For more insights and the latest market updates, follow DnG Commercial Real Estate Agents in Los Angeles and the South Bay.
​