REAL ESTATE NEWS

California's commercial real estate sector is showing resilience in today's climate, with retail a standout, according to Crexi's National CRE Report for January 2026.

Particularly, stable cap rates and persistently low vacancy rates are keeping retail strong in the Golden State.

"This continues to impress us," Adam Siegel, vice president of product growth at Crexi, told GlobeSt.com.

"Construction supply remains tight, which positions retail well if we see interest rates ease, which could unlock new development and investment opportunities," he said. "Regardless, retail remains a strong asset class."

Nationally, retail leads all sectors with 25.84% year-over-year price growth, according to Crexi and vacancy rates have fallen to 4.9%, driven by limited new supply and strong consumer spending in grocery-anchored and neighborhood shopping centers.

Meanwhile, on the industrial side, the story in California is particularly interesting due to its infrastructure.

"The market absorbed the oversupply from the construction boom and has now corrected course," Siegel said.

"What we're seeing is that supply is beginning to tighten and rental appreciation is returning after a period of stagnation. It's a healthy rebalancing that should lead to more sustainable rental growth going forward."

Industrial experienced the most dramatic vacancy improvement, nationally, according to the report, falling 720 basis points year-over-year to 21.50%, as construction pipelines contract and third-party logistics demand accelerates into 2026.

On the other hand, the office sector presents the most mixed picture, with the data suggesting "we've likely hit bottom in many California markets, but recovery remains uneven," Siegel said.

"CBDs and downtown cores in markets like Los Angeles and San Diego continue to face significant challenges, while more insulated suburban markets are stabilizing," he said.

"We're seeing tentative early signals in some markets, but investor activity hasn't returned to historical levels. It remains a 'wait-and-see' moment for office."

Nationally, office vacancy rates improved by 90 basis points month-over-month to 20.7%, and prices increased 8.03% year-over-year, suggesting that the sector has likely bottomed as momentum builds for a return to in-person work.

Source: GlobeSt/ALM