How Is the California Commercial Real Estate Market in 2025?

gloryanng8
Oct 12, 2024
3 min read

Updated: May 24

With the start of 2025, many investors, property owners, and business owners are wondering: What’s happening in the California commercial real estate market right now?

The market has seen several shifts due to rising interest rates, tech industry changes, and the growing demand for flexible and digital-first spaces. This post breaks down what you need to know for 2025—using plain language and helpful insights.

1. Office Spaces Are Getting Smarter and Smaller

Businesses are continuing to downsize their office footprints. Many are choosing:

Shared office spaces
Co-working hubs
Buildings with high-tech features (like smart lighting or energy-saving systems)

Commercial properties that offer flexibility, fast internet, and modern amenities are performing better than large traditional offices.

2. Industrial Real Estate Is in High Demand

Types of industrial real estate—like distribution centers, warehouses, and especially data centers—are booming in California.

Why?

Online shopping keeps growing
Faster shipping requires more local warehouses
Cloud-based services increase the need for data storage

Investors are finding these properties to be stable and high-performing in 2025.

3. Retail Spaces Focus on Experience

Big-box retail continues to struggle, but smaller, community-focused stores are doing well.In 2025, successful retail properties often combine services, shopping, and local events.

Mixed-use spaces (retail + housing or office) are also growing in popularity across suburban and city neighborhoods.

4. Easier Access to Commercial Real Estate Loans

Financing has become slightly more flexible in 2025, especially for:

Business owners wanting to buy their location
New investors entering the commercial real estate market
People looking for business loans to renovate or expand

Banks and lenders are offering a variety of commercial real estate loans with different loan amounts, fixed and adjustable rates, and longer terms.

5. Top California Markets in 2025

Some of the best areas to invest or expand in 2025 include:

Los Angeles – Big demand for creative offices and tech spaces
San Diego – Expanding industrial zones and biotech
Inland Empire – High demand for logistics and shipping centers
Sacramento – Affordable options for investors looking beyond the coast

6. What Business Owners Should Consider

If you're a business owner, 2025 may be the right time to:

Buy your current location with a commercial mortgage
Invest in smaller, flexible commercial spaces
Look at long-term returns from rental property investments
Focus on tenant retention strategies if you already own property

Keeping long-term tenants, reducing tenant turnover, and offering lease renewal options are key to better return on investment (ROI).

7. Summary of 2025 Market Trends

Sector	Trend in 2025
Office	Flexible, tech-friendly spaces
Industrial	Strong growth (especially data centers)
Retail	Local + mixed-use properties thrive
Financing	Wider access to business loans
Hot Areas	LA, SD, Inland Empire, Sacramento