Defense Tech Surge Drives Industrial Demand in Southern California
Defense Tech Surge Drives Industrial Demand in Southern California
Rising geopolitical tensions and a significant increase in United States defense spending are reshaping the industrial real estate landscape in Southern California. Specifically, the South Bay region—comprising cities such as Torrance, Hawthorne, Long Beach, and El Segundo—is experiencing a surge in demand for manufacturing and warehouse spaces adjacent to local ports.
According to Mac Burridge, a managing director at JLL leading the advanced manufacturing team, the current growth trajectory for the South Bay is historic. He compared the current market frenzy to the demand experienced in the Inland Empire during the height of the COVID-19 pandemic, noting that available space is becoming scarce.
The region has a long history as a hub for aeronautics and space technology, hosting major traditional defense contractors. It also serves as the incubator for significant modern innovators, such as SpaceX, which established its operations in El Segundo near Los Angeles International Airport.
While the broader technology sector in California attracted a record $366 billion in startup investment last year, the defense technology sector is seeing a distinct acceleration. Federal appropriations have added substantial funding to Pentagon budgets, with national venture capital investment in U.S. defense tech reaching approximately $70 billion over the last four quarters. Data from Pitchbook indicates this represents a 63 percent increase compared to the previous four-quarter period.
The influx of capital is translating into tangible economic activity. In 2025, Los Angeles County secured more direct Department of Defense contracts than any other region in the United States, reinforcing the area’s critical role in national defense manufacturing and advanced technology.
What to watch
- Future quarterly reports from JLL regarding industrial vacancy rates in the South Bay.
- Department of Defense contract allocations for the upcoming fiscal year.
- Venture capital investment trends in defense technology for the next quarter.
Source: original release