California Commercial Real Estate Growth Expected to Slow, Says Allen Matkins/UCLA Anderson Forecast California CRE Survey

Posted on April 23rd, 2018

Despite Positive Economic Data, Signs Point to an Easing Back of CRE building

Market confidence is receding amongst California's real estate developers, according to Allen Matkins/UCLA Anderson's summer/fall 2017 forecast. Office space as well as retail construction is anticipated to slow down, while at the same time industrial and multifamily are going to grow

Even though the state's unemployment has gone down and earnings as well as spending are increasing, the decrease in optimism by 2020 should lead to a slowing down of development, the report says. The biannual study projects a three-year overview for California's commercial real estate industry.

"A bunch of people did feel it's a natural progression— California's remained in a recovery for 7 years," states John Tipton, a real-estate partner at Allen Matkins.

The belief, when it comes to the state's office market space continues its downwards path because of a lack of confidence in the capability of rents in order to keep up with inflation.

Positive outlook among office space developers in the San Francisco Bay Area, for example, has actually been trending downward for over two years and continues to erode further. The difference is Los Angeles, where property continues apace, driven by the technology and entertainment segments, downtown remains "crane city," the report says.

Around 8 months back this seemed as if multifamily development had actually reached a peak. However, California's ongoing job and income gains has actually fueled a surge in multifamily housing construction, along with developers discovering opportunities in new projects in every market.

All those jobs as well as added earnings, however, will not always strengthen the retail industry. Organized and Planned retail projects will be redevelopment of existing space or a part of a mixed-use project. Retail developers are additionally working in order to create "destination" retail, along with entertainment and activities in order to attract shoppers.

There certainly is a lot of retail inventory available out there. Some of the more old-fashioned shopping Centre which are actually most likely to have a hard time going forward," Tipton says.

Commercial industry forecasts are still quite good with low vacancy rates, the report says, operated by the e-commerce sector's strong demand with regard to warehouse space. Market belief concerning the coming three years has abated somewhat, however vacancies are still very low. 87% percent of the survey panel launched new industrial projects in 2016 and all of them will again this year, the report states. "The industrial sector's gone from white-hot to red-hot," Tipton says.

Visit for the full summer/fall 2017 forecast

Matt Hagar, CCIM


Matt Hagar started in the Real Estate industry straight out of college and hasn’t looked back. Matt He attended the University of the Pacific where he received the President’s Scholarship.