Southern California Commercial Real Estate Outlook 2026: Key Trends Every Investor Should Prepare For
- gloryanng8
- Dec 5, 2025
- 3 min read
As Southern California moves toward 2026, its commercial real estate (CRE) market faces one of the most transformative periods in the last decade. Economic shifts, post-pandemic recovery patterns, new environmental policies, and evolving business needs are reshaping how investors evaluate opportunities throughout the region.
Whether you invest in retail, industrial, office, or mixed-use properties, understanding the forces driving change in 2026 will help you plan more strategically, mitigate risk, and capitalize on emerging growth sectors.
This report breaks down the most important CRE trends for 2026—supported by expert insights and tied to RPM Commercial’s internal research.
Trend 1 — Rising Investor Activity Across Key Southern California Cities
Even with price fluctuations and regulatory challenges, investor demand remains strong in top-performing markets. The most competitive cities for 2026 include:
✔ Torrance
Growth in industrial, aerospace, and retail sectors👉 Torrance Property Management: Navigating a Diverse and Growing Market
✔ Manhattan Beach
Luxury coastal submarket with stable, high-yield returns👉 Manhattan Beach Property Management: Maximizing Returns in a Coastal Luxury Market
✔ Irvine & Orange County
Corporate relocations and tech expansion continue fueling demand
Explore the region’s top opportunities:👉 Top 7 Cities in Southern California for Commercial Real Estate Investment
Trend 2 — Expect Higher Leasing Costs & Operating Expenses in 2026
Commercial property expenses in California have risen consistently since 2022. In 2026, investors should prepare for:
Higher property insurance premiums
Increased CAM fees
Rising labor and repair costs
Energy compliance expenses
Higher property taxes in certain markets
Learn more about how these costs affect total occupancy:
Trend 3 — Industrial Real Estate Continues to Lead the Market
Industrial demand in SoCal remains extremely strong due to:
Logistics and distribution growth
E-commerce expansion
Port activity in LA and Long Beach
Demand for last-mile facilities
Class B and C industrial buildings may also see increased investor interest due to affordability and adaptive reuse potential.
Trend 4 — Office Market Stabilizes, But Tenant Needs Are Changing
Hybrid work isn’t disappearing—but companies are redefining what office space means in 2026.
Expect requests for:
Smaller but higher-quality offices
Flexible lease terms
More amenities
Improved HVAC and energy efficiency
Walkable locations
Investors should avoid outdated, functionally obsolete office properties unless repositioning is possible.
Trend 5 — Triple Net (NNN) Leases Gain Popularity
Due to inflation and operational costs, more investors are shifting toward NNN properties, which push responsibility for:
Maintenance
CAM fees
Insurance
Property taxes
…onto the tenant.
Learn more:👉 Gross Lease vs. Triple Net Lease: What’s Better for Your Southern California Business?👉 Is a Triple Net Lease Right for Your Business? Pros, Cons, and Cost Breakdown
Trend 6 — Stricter Environmental Regulations Will Impact Leasing & Development
California remains a national leader in environmental mandates, and 2026 will introduce stronger standards related to:
Sustainability requirements
Energy-efficient retrofits
Hazardous materials handling
Stormwater and drainage
Carbon reduction compliance
For more details:
Trend 7 — Property Management Becomes Essential for Protecting ROI
With rising operating costs, increased tenant turnover, and stricter compliance requirements, property management becomes more crucial in 2026 than prior years.
See why:👉 Why Commercial Property Management Is the Key to Protecting Your Investment👉 How Proper Property Management and Sales Strategy Drive Value
Trend 8 — Lease Negotiations Will Be More Complicated
In 2026, expect:
More legal scrutiny
Heavier environmental disclosures
More detailed CAM reconciliations
Stricter insurance requirements
Increased tenant requests for flexibility
FAQs
1. Which commercial real estate sector will be strongest in 2026?
Industrial remains the leader, followed by mixed-use and multi-tenant retail.
2. Will leasing costs increase in 2026?
Yes. Rising CAM fees, insurance, and energy expenses will affect total occupancy costs.
3. Are NNN leases better for investors in 2026?
Many investors prefer NNN for predictable expenses and reduced responsibilities.
4. Will office demand improve in 2026?
Yes, but with a preference for smaller, amenity-rich spaces.
5. Should I invest in coastal cities like Manhattan Beach?
Yes—luxury markets typically offer strong long-term value.
6. How will zoning regulations impact 2026 investments?
Expect stricter compliance requirements affecting development and leasing.
7. Do I need a CRE broker more than ever in 2026?
Yes—market complexity makes professional guidance essential.
Prepare for 2026 with Expert Commercial Real Estate Guidance
RPM Commercial Real Estate helps investors navigate the Southern California CRE market with clarity, confidence, and strategic insight.
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