This looks like abiotic damage, which means it would not have been caused by a pest or disease, but rather environmental conditions. Hardy plants like Southern Magnolia are not grown indoors, so we have little experience with what conditions they may develop over the long term when dealing with conditions that don't suit them (not enough light, too warm to go dormant, and low humidity levels). To grow best, cold-hardy plants need a winter "rest" period where they experience a few months of cold dormancy, and over the long term, not having that might interfere with normal growth and maturation. If you don't have an outdoor space to plant the sapling in the ground, then we realize you have little choice (though it would be ideal to keep the plant outside for the winter, if it could be sheltered from the brunt of the cold while staying in the pot), but if you do have a yard where it can grow, it's best to get it planted where you want it to mature. At this point, since it's probably not acclimated to the cold any more, it might have to stay inside until spring.

Did the plant get sprayed or wiped with anything before the brown areas appeared? If so, it might be phytotoxicity, which is tissue damage from chemical exposure, and that can include rubbing alcohol (sometimes used to wipe off houseplant pests), neem oil, leaf shine sprays, or even mist landing on the leaves from spraying a nearby window with window cleaner (or a similar cleaning spray). If not, it might be due to low humidity coupled with a draft (near a chilly window, heat vent, or radiator?), or damage from being under-watered at one point. It's really hard to tell, since it's not a very distinctive symptom.

For now, just keep monitoring the plant for any worsening symptoms, and make sure it's only watered when needed (like a houseplant, let the soil get fairly dry to the touch at least 1-2 inches deep into the container before watering). Make sure the pot has drain holes, and if the pot sits on a saucer (or inside another pot without drainage) to collect water, empty that collected water after watering so it doesn't seep back into the container and risk "drowning" roots. If you have been fertilizing the tree occasionally, discontinue for the winter (the nutrient boost won't be needed, and you don't want unused nutrients accumulating to the point of damaging the roots).

Miri

Thanks, Miri. I did wipe off the leaves once at some point with just a damp paper towel. It has been doing so well until now. I have brought it in every winter for the last 3 years or so. I thought it was too small to plant outdoors yet. I suppose it’s too cold now to put it back on the balcony where it would be protected to winter over. I have always been careful not to over water. Also should I remove the affected leaves?

Olivia

It's probably not acclimated enough now to put back outside for the winter, but next fall/winter, we recommend leaving it outside if possible (ideally, plant it where you want it to mature, and if deer visit the yard, protect it with a cage of wire fencing or a similar barrier until it's older). You can plant in spring if you have a space available for the tree.

No, there is no need to remove the affected leaves, and the rest of the undamaged leaf tissue on those individual leaves is still able to photosynthesize (or at least store carbohydrates) and support plant health and future growth. If it looked like an infection of concern, we would suggest removing those leaves, but that does not look like the case here.

Miri

You're welcome!