July 10, 2013
Allen Matkins/UCLA Anderson California Commercial Real Estate Survey Sees Continued Optimism
Supply and demand in most sectors reaching equilibrium; Industrial space the exception
Developers expressed evident optimism regarding commercial real estate market conditions in the latest Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey. The biannual survey projects a three-year ahead outlook for the state's commercial real estate industry and forecasts potential opportunities and challenges affecting office, industrial and multi-family sectors.
The May 2013 results signify a continued recovery with an acceleration of growth in non-residential building until 2016 or 2017, when growth will continue, but likely at a somewhat decelerated rate. Surveyed industry leaders anticipate a stabilization to occur between vacancy and rental rates as new office space is absorbed into the market. Multi-family markets will experience increases in development and demand, especially with those located near transportation hubs. Industrial markets are expected to remain healthy, but with limited growth due to lack of increased exports.
Highlights of the forecast can be found here: www.youtube.com/watch?v=Zr0Z8UGQ21M
Office Development Sentiment Positive Amid Some Projected Dips in Occupancy Rates
Optimism remains strongest in the Bay Area, with surveyed real estate developers viewing 2016 as a year in which rental rates are expected to be superior to 2013. Though occupancy rates may dip slightly relative to today, sentiment remains positive for non-residential construction in 2016 and 2017, as the expectation is for new office space to be absorbed.
In the Bay Area, half of the surveyed developers responded that they will begin a new project in the coming year, and inSouthern California, one third of those expected to do the same. The Survey points to continued growth in office space construction at the same or higher rates as today over the next three years.
Multi-family Sector Looking Robust
In the three markets, Los Angeles, San Francisco and Silicon Valley, Survey participants continued to be confident about the outlook for multi-family housing between now and 2016. More than half of the developers surveyed expect to begin new multi-family projects in the coming 12 months.
Double-digit rent increases and declining vacancies in San Francisco have driven a number of new building projects currently under construction. Development activity is also strong in Los Angeles in response to declining vacancy rates in the Downtown area and the opening of a new light rail line that promises to spur a building boom in the county. These projects, along with the survey results, support continued growth in multi-family housing through the survey horizon of 2016.
The Industrial Sector moves into equilibrium
Survey results show that the pace of new additions for industrial space has moderated over the past six months. The survey panel judged that from last summer Survey, the pace of new additions to industrial space was met and absorbed by the market. While conditions are expected to improve through 2016, an acceleration of new development is less likely. Consequently, only one third of those surveyed in Southern California and two thirds from the Bay Area expect to be engaged in developing projects during the next year, with planned additions expecting to meet demand by 2016.
About the Survey
For a copy of the latest Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey and Index Research Project, please visit www.allenmatkins.com or www.uclaforecast.com.
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, 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 approximately 220 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 on the Web 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. UCLA Anderson faculty members are globally renowned for their teaching excellence and research in advancing management thinking. Each year, UCLA Anderson provides a distinctive approach to management education to more than 1,800 students enrolled in its 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. Combining selective admissions, varied and innovative learning programs, and a worldwide network of 35,000 alumni, UCLA Anderson develops and prepares global leaders.
UCLA Anderson Office of Media Relations, (310) 206-7707, Media.firstname.lastname@example.org