Thankful for Our Clients and the Opportunities Ahead
This time of year encourages us to slow down, focus on family, and reflect on what we’re grateful for. While gratitude shouldn’t require a designated holiday, the pace of business, especially here in Southern California, makes these moments of reflection especially valuable.
For us, it starts with you.
We are deeply thankful for our clients who continue to place their trust in our team to help guide important industrial and commercial real estate decisions. Your confidence allows us to do what we do best, and we don’t take that responsibility lightly.
Gratitude in a Year of Market Resilience
As we look back on the year, there is much to be thankful for even amid sluggish leasing and sales activity and persistent economic uncertainty.
The industrial real estate market weathered elevated inflation and avoided the full-blown correction many anticipated. At the same time, the passage of landmark federal tax legislation has created meaningful opportunities for property owners, investors, and occupiers.
One of the most significant developments was the passage of the One Big Beautiful Bill Act of 2025 (OBBBA) and its impact on commercial real estate.
Why the OBBBA Is a Game Changer
If you followed us throughout the year, you’ll recall our discussions around:
- Elevated estate tax exemption thresholds
- Enhanced R&D expensing rules
- The return of 100% bonus depreciation, especially when paired with cost segregation
We’ve outlined how this powerful combination can generate substantial savings in our posts on bonus depreciation and cost segregation strategies.
For many commercial property owners, these provisions can translate into hundreds of thousands or even millions of dollars in immediate tax benefits.
In our view, the OBBBA represents the most impactful positive shift in tax law since the Reagan era. And 2026 will be the first full year operating under these new rules.
Why Early Awareness Matters
Like many major policy changes, the OBBBA enjoyed a brief spotlight before being overshadowed by other national and global issues. As those issues stabilize, we believe attention will return to the law — and early adopters will be best positioned to benefit.
Early adoption has historically played a key role in commercial real estate market cycles. Once these incentives are fully absorbed into the market, they are likely to stimulate additional demand for both leased and owner-occupied space.
Looking Ahead to 2026
If current trends continue, we expect demand for quality commercial and industrial space to once again exceed supply in 2026. That imbalance could:
- Slow or reverse rising vacancy rates
- Place upward pressure on lease rates
- Support higher sales pricing across Southern California
Developers have already pulled back due to higher capital costs and recent increases in vacancy. As a result, it may not take much of a shift in demand to tighten the market. These dynamics are particularly relevant for industrial real estate users and owners in Southern California.
Just a handful of large transactions could meaningfully absorb remaining vacancy — especially as businesses expand, take additional space, and invest in equipment that can now be expensed immediately.
A Thoughtful and Optimistic Outlook
Bottom line: We are excited about 2026.
We believe the industrial property market is moving toward a healthier balance — one that is more predictable and supportive of growth. As uncertainty fades, we expect many Southern California business owners to regain confidence and move forward with expansion plans.
No matter what the coming year brings, we remain committed to helping you navigate opportunities and challenges alike.
Planning Ahead for 2026? We’re Here to Help.
If upcoming tax changes, market shifts, or real estate decisions are on your radar for the year ahead, a conversation now can help you prepare with confidence.
👉 Connect with a Zehner Hill industrial real estate advisor