California Is Building Once Again According to New Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey
California's steady recovery is reflected in optimism and new construction in all markets
LOS ANGELES (July 24, 2014) - New commercial space is expected to increase through 2017 across most California real estate markets, thanks in part to job growth and goods moving through the state's ports. The outlook is based on the recent Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey, a leading indicator of future commercial construction in California that analyzes the three-year outlook for real estate development activity and provides insights into new, not yet on the radar, building projects.
For a copy of the latest Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey and Index Research Project, click here.
"The optimism about 2017 in the surveys, broad-based across all markets, is an important indicator of both the probability of new additions to stock being started over the next two years and of opportunities for new investment in multi-family, office and industrial space," says Jerry Nickelsburg, adjunct professor of economics at UCLA Anderson School of Management and senior economist with UCLA Anderson Forecast. "This optimism, supported by job and income growth on the demand side and a lack of sufficient building on the supply side, reflects what we expect to be another good run of building in the California non-residential space, activity that should continue through the next phase of the economic recovery."
Video highlights of the survey are available here.
Office Development to Remain Steady
Previously, uncertainty about the effects of the 'fiscal cliff' and weakened vacancy rates in 2012 and 2013 caused office market developers in the Bay Area to view the existing stock as well as new construction in the pipeline to be sufficient to meet demand. In the latest Survey, one half of the panel plan to start one or more new projects in this market within the next 12 months showing an expectation of improving markets.
Developers in the San Diego, Orange County and Los Angeles markets are viewing 2016 and 2017 positively and expect office markets in Southern California to be better in both rental and occupancy rates. However, developers in all three markets are cautious about new office space development, as demand catches up with supply. Fewer than 30 percent of the panel surveyed indicated plans to develop new office space by mid-2015.
The Multi-Family Sector Poised for Activity
Multi-family housing development continues to climb in the San Francisco and Silicon Valley areas as economic growth results in new household formation. Forty-four percent of the Bay Area Panel stated that they will be starting one or more new multi-family projects in the coming year, the same percentage of previously surveyed Panelists who started one or more projects last year. This is further evidence that the Bay Area is leading the way in new multi-family housing construction.
In Los Angeles, where little multi-family housing has been built since 2006, a healthier job market and income growth are driving greater demand for rental housing. The latest Survey indicates that developers see this trend continuing for the next three years and are engaging in new multi-family housing projects.
Industrial Sector Remains Confident
There is a renewed sense that the rapid pace of growth in coastal California and the steady increase in imported goods will continue to create more industrial space requirements in the coming three years. This bright outlook in the Bay Area, Inland Empire, Los Angeles and Orange County markets will engender new construction to support the California industries, exports to Asia and Mexico and imported consumer goods.
Sentiment across markets in this sector has remained consistent for the past six months. Since mid-2013, one half of the panel of developers started a project and fully 70 percent will begin one or more industrial space projects in the coming 12 months.
About the Survey
For more information on the survey and industry insight view the video here.
The Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey and Index Research Project polled a panel of California real estate professionals in the development and investment markets, on various aspects of the commercial real estate market. The survey is designed to capture incipient activity by commercial real estate developers. To achieve this goal, the panel looks at the markets three years in the future, and building conditions over the three-year period. The survey was initiated by Allen Matkins and the UCLA Anderson Forecast in 2006, in furtherance of their interest in improving the quality of current information and forecasts of commercial real estate.
About Allen Matkins
Allen Matkins, founded in 1977, is a California-based law firm with more than 200 attorneys in four major metropolitan areas of California: Los Angeles, San Francisco, Orange County and San Diego. The firm's core specialties include real estate, real estate and commercial finance, bankruptcy and creditors' rights, construction, land use, natural resources, environmental, corporate and securities, intellectual property, joint ventures, taxation, employment and labor law, and dispute resolution and litigation in all these matters. For more than 35 years, Allen Matkins has helped clients turn opportunity and challenge into success by providing practical advice, innovative solutions and valuable business opportunities. When clients' challenges require experienced trial counsel, Allen Matkins has a proven track record of successful litigation before juries, judges and arbitrators. Allen Matkins is located on the Web at www.allenmatkins.com.
About UCLA Anderson Forecast
UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation and was unique in predicting both the seriousness of the early-1990s downturn in California and the strength of the state's rebound since 1993. More recently, the Forecast was credited as the first major U.S. economic forecasting group to declare the recession of 2001. Visit UCLA Anderson Forecast at http://www.uclaforecast.com.
About UCLA Anderson School of Management
UCLA Anderson School of Management is among the leading business schools in the world, with faculty members globally renowned for their teaching excellence and research in advancing management thinking. Located in Los Angeles, gateway to the growing economies of Latin America and Asia and a city that personifies innovation in a diverse range of endeavors, UCLA Anderson's MBA, Fully Employed MBA, Executive MBA, Global Executive MBA for Asia Pacific, Global Executive MBA for the Americas, Master of Financial Engineering, doctoral and executive education programs embody the school's Think In The Next ethos. Annually, some 1,800 students are trained to be global leaders seeking the business models and community solutions of tomorrow. Follow UCLA Anderson on Twitter or on Facebook.
UCLA Anderson Office of Media Relations, (310) 206-7707, Media.firstname.lastname@example.org
2014 John S. Long Outstanding Student in Real Estate Award
Tim Kawahara, Executive Director, UCLA Ziman Center for Real Estate
The Ziman Center is pleased to announce that the 2014 recipient of the John S. Long Outstanding Student in Real Estate Award is Bradley Pearson. Brad, UCLA Anderson MBA '14, has been a tireless leader in the real estate program and has enhanced the student experience at Anderson. He has been a guide and inspiration to his peers, demonstrating a genuine enthusiasm for the real estate programs offered through Anderson and the Ziman Center for Real Estate.
Brad's dedication to real estate has directly resulted in an increased awareness and interest in Anderson's real estate programs among both professionals and students. As Co-VP of Development for the Anderson Real Estate Association (AREA) Brad successfully coordinated a San Francisco Day-on-the-Job event that established relationships with firms in the Bay Area and subsequently led to a full day of unique site visits with companies who are now more deeply aware of the real estate focus at UCLA Anderson. Additionally, as a Real Estate ACT Coach and a teacher's assistant, Brad's candor and enthusiasm has nurtured student interest in the real estate sector. In 2013, Brad was identified as a next generation entrepreneur and was selected as a Peter Bren Distinguished Fellow in Entrepreneurial Real Estate and was awarded the 2013 Tracy Family Real Estate Fellowship. He also represented Anderson at the 2013 NAIOP Real Estate Challenge, as well as the 2012 UT Austin McCombs Case Competition. Brad's commitment and accomplishments perfectly embody the spirit of the John S. Long Outstanding Student in Real Estate Award, and we wish him continued success in his post-Anderson ventures.
About the John Long Outstanding Student in Real Estate Award
This award recognizes the UCLA Anderson MBA candidate in each class who has demonstrated and exercised the qualities required to become an influential leader in the industry. The award is not based purely on Academic performance or industry involvement, but on the student's commitment and contribution to the strength and the reputation of the UCLA Real Estate Program at Anderson and throughout the University. The recipient is recognized by the committee, as well as his or her peers, as someone whose Anderson career has been distinguished by action, commitment, and the pursuit of excellence, both in individual endeavors and on behalf of the Anderson Real Estate Program.
This prestigious award is named for John S. Long, the Founding Chairman of the Ziman Center's Board. The criteria by which the winner is selected are designed to reflect John's own leadership style. John Long is President and CEO of Highridge Partners, Inc., which he founded in 1978. The company has been so successful that John's views are seen as a bellwether of the real estate industry to this day. Notwithstanding his tremendous success, John is known as someone who flies largely under the radar, relying upon fundamental principles, rigorous analysis, and investing discipline, and avoiding the public notoriety that seems to follow other large players in the industry.
UCLA Students Win 2014 Low-Income Housing Competition
By Connor Johnson, UCLA Luskin School of Public Affairs, MURP 2014; and Gustavo De Haro, UCLA Luskin School of Public Affairs, MURP 2014
Two teams of master's students from UCLA's Luskin School of Public Affairs competed in the 23rd Annual Bank of America Merrill Lynch Low-Income Housing Challenge. This was the first time in over four years that any team from UCLA has participated in the challenge and both teams advanced to the finals, which were held in San Francisco on May 15, 2014.
The Los Urbanistas team was comprised of seven first-year Master in Urban Planning students. The Master of Urban and Regional Planning (MURP) Associates team was comprised of six second-year Master in Urban Planning students and one Master in Architecture and Urban Design student. The MURP Associates Team won first-place in the competition with their project titled Xipe Totec (pronounced si-pe toh-tec), named after the Aztec God of the East, symbolizing regeneration and new life.
Bank of America Merrill Lynch sponsored the challenge and invited West Coast graduate and undergraduate schools to submit a proposal for a low-income housing development. Each team worked to identify a site and then create a proposal that included explanations of the development program, market, design, services and financing. The teams submitted an initial proposal in April. After a review by a panel of judges, both UCLA teams advanced to the finals and created a full proposal.
The UCLA teams competed against five other teams from four schools including Berkeley, Cal Poly San Luis Obispo, UC Irvine and University of Washington. Both teams had guidance from facility advisor Joan Ling, who is a professor of Urban and Regional Planning at UCLA's Luskin School of Public Affairs.
The Los Urbanistas team included class of 2015 urban planning students: Allyson Ujimori, Ana Tapia, Connor Johnson, Daryl Chan, Laura Krawczyk, Marysol Smith and Precy Agtarap. The team partnered with affordable housing developer A Community of Friends to create a proposal for a permanent supportive housing development in Huntington Park called Randolph + State. The proposed development would have 64 units to house low-income families and transitional age youth (TAY), 18-25 year old youth that have aged out of the foster care system or are homeless. The development would also feature a childcare facility, courtyard and roof-top garden for the residents. (To view the UCLA Randolph + State video, click here.)
The MURP Associates team included class of 2014 urban planning students: Ara Kim, Daisy Miguel, Gustavo De Haro, Randy Mai, Carlos Hernandez, Dennis Maravilla, and architecture student Brandon Harper. The team partnered with affordable housing developer, Abode Communities, to develop an inspiring proposal for a permanent supportive housing development in Boyle Heights called Xipe Totec. The team proposed a mixed-use project with 58-units for low-income TAY. The project also featured a social enterprise operated by Homeboy Industries, known for their business motto, "nothing stops a bullet like a job." Additionally, Xipe Totec also proposed a full service medical clinic on site. (To view the UCLA Xipe Totec video, click here.)
Judged on the criteria of creativity and financial feasibility, the unique features of this development included an architecture design reminiscent of pre-Columbian Aztec temple, Teotihuacán. Additionally, Xipe Totec proposed to provide a full array of rehabilitative mental health services for residents of the development. These features of the project stood out to the judges allowing MURP Associates to win the competition. This was a rewarding experience for the team as graduating Masters of Urban and Regional Planning student, Gustavo De Haro, describes:
"Winning this competition represents a victory for planning and making change in your community. The most exciting take away from this competition was learning that in Boyle Heights it is possible to develop a project that is 100% affordable, does not displace residents, can create jobs, provide medical services and achieve financial feasibility. Xipe Totec symbolizes a new direction for Boyle Heights - it offers this community a space where youth have the opportunity to rebuild and shape the future of their own neighborhood."
The Bank of America challenge allowed students from both teams to gain invaluable experience in the development of affordable housing. Many of the participants on each team plan to pursue a career in affordable housing development or a related field. Both teams received funding from the UCLA Ziman Center for Real Estate's Howard and Irene Levine Program in Housing and Social Responsibility and the UCLA Luskin School of Public Affairs to attend the competition.
UCLA Real Estate Law Clinic Breaks New Ground for Los Angeles Supportive Housing
By Amir Sadr, UCLA Law JD 2014; and Steve Serna, UCLA Law JD 2014
The UCLA Real Estate Law Clinic: Affordable Housing is a year-long clinical course offering UCLA Law students practical, hands-on training and experience working on live real estate transactions involving the development of affordable housing. The clinic, founded in 2012 with support from the UCLA Ziman Center for Real Estate, is taught by UCLA Law Adjunct Professor Lance Bocarsly, founding partner at Bocarsly Emden Cowan Esmail & Arndt LLP. Students in the clinic represent non-profit organizations at various stages in the process of developing affordable housing for low-income residents of Los Angeles. Through classroom instruction drawing upon practice-oriented readings, case studies and simulated exercises, as well as clinical work representing non-profit clients, students learn to apply the concepts of Advanced Real Estate Transactions in a real world context and acquire skills required by a modern transactional real estate practice.
In the 2013/2014 calendar year, the course focused on representing non-profit housing developer Step Up on Second, Inc. with their development of an affordable housing complex in Santa Monica, California. Step Up provides permanent supportive housing and on-site support services to chronically homeless individuals with a mental illness in communities like Santa Monica and Hollywood. Clinic work involved assisting Step Up with the purchase of a parcel of land for the development, contraction financing, permanent financing, and title due diligence, among other processes. The students in the clinic were recently invited to see the fruits of their labor at a groundbreaking ceremony on-site for Step Up's Santa Monica development.
Anderson Real Estate Students Spend a "Day on the Job" in San Francisco
By Jon Cowan, UCLA Anderson FEMBA 2014
On April 10, 2014 another successful Anderson Real Estate Association (AREA) Day on the Job ('DOJ') occurred in San Francisco. The trip was organized by entrepreneurial UCLA Anderson students interested in working in the Bay Area post-graduation. Even for those who will remain in Southern California after school, it was a great opportunity to get to learn more about the booming San Francisco real estate market.
The day began with a visit to Forest City's innovative 5M Project. Participants saw the creative for-profit and non-profit office space which the developer has programmed in the historic San Francisco Chronicle building prior to an ambitious development that will occur on site. Forest City Project Manager Andy Wang lead a tour of the site, pointing out how the company has been experimenting with public art and community events to activate the space and generate positive community attention. The team then met with Project Director Audrey Tendell to discuss the company's approach to development in the Bay Area. Forest City is now working on the entitlements for the project.
Next, the students met Anderson alumnus Jaime Zadra, Principal, Prudential Mortgage Capital Company, at the Emerald Fund's 100 Van Ness project. Marc Babsin, a Principal at Emerald Fund provided a tour of the building. DOJ participants were able to ride to the rooftop terrace where there were sweeping views of the Bay and Golden Gate Bridges, as well as of the more modern Twitter lunch commissary. There was also the opportunity to see several model units, to learn about the development process for the building, as well as Marc's perspective on the lucrative San Francisco multifamily rental market.
The Anderson students also met with recent MBA graduate Sean Sullivan of Merlone Geier. Sean presented on the retail market, Merlone Geier's investment philosophy and successful track record, as well as a detailed look at value-add business plans that were being implemented at two different properties.
Following these site visits, everyone attended a happy hour event co-sponsored by AREA and the Ziman Center for Real Estate. Dozens of participants attended from real estate and finance companies in San Francisco, providing a unique opportunity for students to network with Anderson alumni as well as other Bay Area real estate professionals.
UCLA Green Building Symposium - Building Better Places
By Brian M. Sterz, UCLA Anderson FEMBA Class of 2014
On Wednesday, February 26, 2014, the UCLA Ziman Center for Real Estate and the UCLA Institute of the Environment and Sustainability partnered to present the UCLA Green Buildings Symposium - Building Better Places in UCLA Anderson's Korn Convocation Hall. The event successfully engaged leading real estate, sustainability, and public policy professionals in a lively debate over current and future drivers and financial incentives for new and existing green building in the Southern California region and across the state.
The Ziman Center and IoES were honored to have Jeffrey T. Mezger, president, chief executive officer, and director of KB Home, launch the symposium with an informative keynote address entitled "The Sustainable Journey." Mezger's presentation chronicled KB Home's evolution as one of the most innovative sustainability leaders in the real estate industry, and highlighted the company's opportunity to educate and provide customers with sustainable and environmentally-friendly housing solutions, which are not currently available from competitors or in the existing stock of resale homes. Mezger concluded his keynote with a glimpse of KB Home's future "Double Net Zero Home" that will combine cutting edge technology in both energy and water conservation. (To download Jeff Mezger's KB Home PPT slide deck PDF, click here.)
Matthew E. Kahn, director of research, UCLA Ziman Center for Real Estate, and professor, UCLA Institute of the Environment and Sustainability, followed with a critical discussion on current trends and policy initiatives in the sustainable building marketplace. Kahn noted how new Class A commercial construction had led the way in LEED certification and Energy Star building, and provided data showing that these buildings achieved 2%-6% higher rents because of increased tenant demand. Kahn believes that the cost of "greening" properties will fall as human capital, including LEED certified real estate professionals, increases and competition from international markets brings down the cost of solar power and other sustainable building products.
The Symposium concluded with a deep-dive panel discussion led by David Hodgins, executive director of the LA Better Buildings Challenge. Hodgins led the interaction between Daniele Horton, director of sustainability at CommonWealth Partners, and founder and principal, Verdani Partners; Adhamina Rodriguez, director of sustainability at Swinerton Builders; Peter Belisle II, Southwest market director for Jones Lang LaSalle; and Ted Bardacke, deputy director, sustainability on the Budget & Innovation Team for the City of Los Angeles. Ted addressed the City's initiatives on climate change resource management, access and availability of housing, equity and public health and the potential effects that policies such as California Assembly Bills AB32 and AB1103 may have on new and existing sustainable housing and construction.
The UCLA Ziman Center for Real Estate and the UCLA Institute of the Environment and Sustainability would like to thank all industry professionals, faculty and students from across the UCLA campus for attending this successful and timely event.
UCLA Anderson Team Places First at UNC Real Estate Challenge
Marking a New Level of Achievement on a National Arena
Chapel Hill, NC - On Friday, February 21st, 2014, students from the UCLA Anderson Real Estate Association (AREA) beat 15 teams representing the nation's top business schools and claimed the school's first victory at the annual UNC Real Estate Case Competition.
UCLA Anderson students placed second in this challenge before, in 2008, 2009, and 2012, as well as placing third in 2013. This year's competition included: NYU Stern (2nd place), Columbia (shared 3rd place), University of Virginia Darden (shared 3rd place), Duke Fuqua, Northwestern Kellogg, London Business School, UT Austin McCombs, Vanderbilt Owens, Chicago Booth, Cornell Johnson, UNC - Chapel Hill Kenan-Flagler, USC Marshall, Georgetown McDonough, University of Michigan Ross, and Dartmouth Tuck.
Neil Doshi, Reisa Bloch, Jack Agresta, and Patrick Devitt received the case on Thursday, February 13th and began preparing a comprehensive proposal for a mixed-use development located near Hangzhou, China. On Tuesday, February 18th, the team submitted their presentation slides to a panel of judges comprised of real estate professionals and flew to Chapel Hill the next day. As in previous years, the trip was sponsored by the Ziman Center for Real Estate at UCLA.
The 2014 team, made up entirely of first-year UCLA Anderson MBA students under the advisement of Professor Paul Habibi, successfully presented in front of 16 judges, including Mr. Don-Ho Chien of Century Bridge, whose investment provided the basis for the competition case. As David Hartzell, the Director of The Wood Center at UNC underlined, the UCLA Anderson team showcased its talent by conducting a thorough market research, treating the assignment as a real pitch, building the exit strategy with the equity partner in mind, and demonstrating an in-depth understanding of the case details.
This achievement will build on itself as the program's reputation grows and more real estate students are attracted to the school. It is a victory that highlights assiduous efforts on the part of AREA, The Ziman Center, and the associated real estate students and faculty to establish a stronger brand for UCLA Anderson as a world-class real estate program.
UCLA Ziman Center to Host Green-Building Symposium
The UCLA Ziman Center for Real Estate will host the UCLA Green Building Symposium on Feb. 26 in Korn Hall. Co-sponsored by the UCLA Institute of the Environment and Sustainability Corporate Partners Program, the event's theme is "Building Better Places" and discussion will focus on the current climate and the most salient issues regarding green building in the region and state. "The UCLA Ziman Center is exceptionally pleased to partner with the UCLA Institute of the Environment and Sustainability to present this important symposium, which will focus on the nexus between the built environment and sustainable practices. The symposium will assemble some of the leading experts, innovators, policy-makers and practitioners in the green-building space," said Tim Kawahara, executive director of the Ziman Center.
The afternoon will feature a keynote address by Jeffrey T. Mezger, president, chief executive officer and director of KB Home; as well as a panel discussion on the "state of the state" of green building. Emphasis will be on the drivers to a wider adoption of green building policies and techniques, including landlord ROI, tenet demand, public perception, government incentives, public-private partnerships, availability of capital, new technologies, retrofit incentives and property type variation and profiles. Panelists-Daniele Horton, director of Sustainability, CommonWealth Partners, and founder and principal, Verdani Partners; Peter T. Belisle II, Southwest Market director for Jones Lange LaSalle; Adhamina Rodriguez, director of Sustainability for Swinerton Builders; and Ted Bardacke, deputy director of Sustainability for the City of Los Angeles-represent the spectrum of issues surrounding sustainable building.