The Unraveling of Industrial Real Estate: Why Rexford’s Stock Suffered Its Worst Day in Years

On April 25, 2025, Rexford Industrial Realty (REXR) faced a stark reckoning. The company’s stock plummeted 12.4%, its worst single-day decline in years, after a first-quarter earnings report exposed vulnerabilities in its core business. The sell-off was not merely a reaction to short-term underperformance but a verdict on deeper structural challenges reshaping the industrial real estate sector. Below, we dissect the forces behind the collapse—and what they portend for investors.

The Catalyst: Q1 Earnings Miss

Rexford’s Q1 2025 results delivered a stark reality check. Occupancy rates dipped to 94.5%, a 1.2-percentage-point quarterly decline, while same-store net operating income (NOI) fell 5.2% year-over-year. These figures missed consensus expectations by a wide margin, prompting the company to slash its full-year funds from operations (FFO) guidance by 8–10%. The revisions, coupled with CEO David Geltner’s acknowledgment of a “heightened supply-demand imbalance,” signaled a shift from optimism to caution.

Investors reacted swiftly, pricing in the risks of a prolonged slowdown. reveals the abrupt sell-off, with shares dropping from $71.30 to $62.40—a stark contrast to its 52-week high of $88.00. The market’s verdict: Rexford’s growth story has stalled.

Occupancy and NOI: The Weakening Foundation

The occupancy decline and NOI contraction are intertwined symptoms of a broader malaise. For a REIT reliant on industrial warehouses, occupancy is the lifeblood of cash flow. The drop to 94.5%—while still high—reflects rising vacancy rates in key markets like Southern California and the Inland Empire, where competition among landlords is intensifying. Meanwhile, the 5.2% NOI drop underscores a struggle to pass on rising costs or raise rents in a cooling economy.

would likely show a steady decline from 96.5% in Q1 2024 to 94.5% in Q1 2025, a trajectory that alarms investors accustomed to the sector’s prior resilience.

The Broader Industrial Real Estate Dilemma

Rexford’s troubles are not isolated. The industrial sector, once a pillar of U.S. real estate growth, is contending with a perfect storm:

1. Supply Overhang: New warehouse developments have outpaced demand, especially in overheated markets like the Inland Empire, where vacancy rates have surged to 5%—a level last seen during the 2008 crisis.
2. Economic Headwinds: Smaller tenants, particularly e-commerce logistics firms, are delaying lease renewals or downsizing amid slower consumer spending.
3. Debt Costs: While Rexford’s balance sheet remains robust (low 5.8x debt-to-EBITDA, $350M liquidity), higher interest rates are squeezing marginal tenants and investors alike.

The CEO’s warning about “heightened uncertainty” is no understatement. would likely show its underperformance widening as peers also face pressure, though none have cut guidance as sharply.

Balance Sheet Strength and Dividend Resilience

Amid the gloom, Rexford retains two critical anchors: its fortress-like balance sheet and its dividend. The $350M liquidity buffer provides flexibility to navigate tenant churn or pursue acquisitions at distressed prices. The maintained $0.78 quarterly dividend, yielding 5.8% post-selloff, offers ballast for income-focused investors.

Yet these positives must be weighed against the risks. The dividend’s sustainability hinges on occupancy stabilizing—a far from certain prospect. If NOI declines deepen, pressure to cut payouts could follow, as seen in peers like Prologis (PLD) during the 2020 pandemic.

Conclusion: A Crossroads for Rexford?

Rexford’s 12.4% plunge was less a random event than a culmination of trends now baked into the industrial sector. The data paints a clear picture:
- Occupancy and NOI: A 1.2% quarterly occupancy drop and 5.2% NOI decline signal a shift from scarcity to surplus.
- Guidance Cut: The 8–10% FFO reduction implies a 2025 outlook where growth is stagnant or negative, even with a stable balance sheet.
- Valuation: At $62.40, the stock trades at 14.5x 2024 FFO estimates—a discount to its five-year average of 16.8x.

For investors, the question is whether this is a buying opportunity or a warning sign. The dividend and liquidity offer a floor, but the sector’s supply-demand imbalance and macroeconomic risks suggest patience may be warranted. If Rexford can stabilize occupancy above 94% and reverse NOI declines by year-end, the stock could recover. Failure to do so could see it join peers in a prolonged slump.

In the industrial real estate market, resilience is now measured not just in square footage but in the grit to endure a recalibration. For Rexford, the next quarters will determine whether this stumble becomes a fall—or a stepping stone to reinvention.