Common Concessions in Southern California Industrial Real Estate

These are the common concessions in industrial real estate

In the Southern California industrial real estate market, you know that concessions can make or break a deal in a competitive submarket like Vernon, one of LA’s most vital industrial hubs. Whether that be negotiating a lease on a newly constructed Class A logistics center or a more utilitarian Class C warehouse, concessions play a strategic role in closing transactions.

These are the most typical concessions I come across when negotiating industrial real estate deals in Southern California, along with insights into how these incentives tend to vary by building class.

Free Rent (Rent Abatement) : Popular Concession

Free rent is one of the most commonly negotiated concessions in the market, and the number of months offered is usually factored by the class of the building and overall market conditions.

Class A buildings, modern, high-clearance facilities with dock-high loading, large yards, and institutional ownership may offer one to three months of free rent on a five-year lease term, depending on current vacancy levels. In today’s market, where new construction is limited and demand remains steady, landlords may still hold firm, but they're open to negotiating short periods of rent abatement to attract strong credit tenants.

Class B buildings, often with functional layouts but fewer modern features, are more flexible. You’ll often see two to four months of free rent, especially for leases over five years or in spaces that have been vacant for a while.

Class C properties, typically older and more specialized or less efficient buildings, are flexible and you can leverage the concession. Owners of these buildings, sometimes private or usually mom-and-pop landlords, may offer longer rent abatement periods to compete with better-located or more modern alternatives. We’re seeing three to six months of free rent in some deals, particularly if a tenant is willing to take the property "as-is."

Tenant Improvement (TI) Allowances

Tenant Improvement allowances are a critical concession for tenants planning to build out offices, improve lighting, install racking, or otherwise modify the warehouse for their operations.

Class A properties often come with shell condition offices and warehouse space. It is common to see Tenant Improvement allowance concessions ranging from $10–$20 per square foot, especially if the landlord wants to land a national or credit tenant.

Class B buildings may come with a small office footprint but need customization. In this class, Tenant Improvement allowances tend to be more modest, ranging around $5–$10 per square foot. Landlords may instead offer a turnkey buildout rather than cash, depending on their resources and the tenant's needs.

Class C space is rarely turnkey and often leased "as-is." If the landlord wants to secure a long-term tenant, particularly from a stable or expanding business, there is room to negotiate creative Tenant Improvement allowance structures or graduated rent (phase up) to offset the cost of tenant improvements.

Early Access for Improvements or Move-In

Another common concession for tenants with complex operations or heavy customization needs, is early access before lease commencement. For the most part, this is typically granted across all building classes but with varying degrees of formality (may have to pay prorated rent):

Class A landlords will generally document early access in the lease, defining the scope of allowed activity (construction, racking, IT setup, etc.) and requiring insurance and indemnity(determining who will cover damages, legal costs and other liabilities related to the property).

Class B and C owners may be more informal or flexible, sometimes offering access up to 30 days early at no charge. This is a more efficient and cost-effective solution where many users need to coordinate logistics, equipment delivery, and or city permits.

Option Periods and Expansion Rights

Tenants may ask for options to renew, expand, or even purchase.

Class A landlords are more restrictive and generally only grant one or two option periods at market rent, although tenants with strong financials can sometimes negotiate fixed rate increases or a right of first offer (ROFO) on adjacent space.

Class B and C owners may be open to more creative terms. I’ve seen users negotiate purchase options, below-market extension terms, or first rights on adjacent parcels or buildings.

Conclusion

Concessions should be part of your strategy as a property owner looking to lease up space or a tenant needing to lease a space. Understanding how these concessions vary by building class, area, and market conditions can help you extract more value from every negotiation.

If you’re looking to lease or lease out industrial space in Vernon or anywhere in SoCal, send me a DM, call me at (310) 943 - 8543 or send me an email to michael@cbi-commercial.com. Happy to assist you negotiate the best terms and conditions for your property or business.