Developers in California's commercial real estate industry continue to express optimism, and there are solid indications of impending new commercial development in the state, according to the latest semi-annual Allen Matkins/UCLA Anderson Forecast commercial real estate survey. The survey polls industry professionals on their views of how the market will change over the coming three years.
"Since the end of the recession, we have seen developer optimism spread to all markets and types of commercial space, along with an increased willingness to go forward with new development," said UCLA Anderson Forecast senior economist Jerry Nickelsburg.
Promising news also comes from the first Allen Matkins/UCLA Anderson Forecast survey of multi-family housing developers. Overall, 70 percent of survey participants in San Francisco, the Silicon Valley and Los Angeles plan to begin new multi-family housing developments in the next 12 months. The turnaround in multi-family residential construction is being driven by high occupancy rates and rising rents, particularly in the Bay Area, as household formation begins to rebound in California.
"This growth in multi-family housing is encouraging," said John Tipton, a partner at Allen Matkins. "It is in markets where there have been substantial job gains — especially for younger workers who prefer to rent apartments in urban areas — and where property values are high."
California office-space market sentiment has been positive over the past three years as well, but it did not immediately translate into any significant new development. After two-and-a-half years, the Bay Area panel indicated a change. And in the current survey, Southern California developers have joined their Bay Area counterparts; approximately 25 percent of survey participants are planning to start new development in the coming 12 months.
Despite uncertainty about Europe's economic future and moderate growth in California import activity, there is also strong optimism in California's industrial space market, which should generate new building activity in the next 12 months as well. This optimism has been present in the survey panel for more than two years, with industrial space occupancy rising to 96 percent in both Los Angeles and Orange County, driven by growth in California manufacturing exports.
The survey indicates that opportunities for new developments have emerged in this market, particularly in Los Angeles and Orange County.
For a copy of the latest Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey and Index Research Project, visit 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 office space and investment market, posing a series of quesitons 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, 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 to further their interest in improving the quality of current information and forecasts of commercial real estate.
Allen Matkins, founded in 1977, is a California-based law firm with approximately 220 attorneys in four major metropolitan areas of California: Los Angeles, Orange County, San Francisco and San Diego. The firm's core specialties include real estate, real estate finance, commercial finance, bankruptcy and creditors' rights, construction, land use, natural resources, environmental issues, corporate and securities law, intellectual property, joint ventures, taxation, and employment and labor law, and the firm offers dispute resolution and litigation in all these matters. For more than 30 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.
The 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 downturn in California in the early 1990s and the strength of the state's rebound that began in 1993. The Anderson Forecast also was credited as the first major U.S. economic forecasting group to declare the recession of 2001.
The 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 M.B.A., fully-employed M.B.A., executive M.B.A., global executive M.B.A. for Asia Pacific, global executive M.B.A. 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 37,000 alumni, UCLA Anderson develops and prepares global leaders. (Follow UCLA Anderson on Twitter and on Facebook.)