ALLEN MATKINS | UCLA ANDERSON FORECAST
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Allen Matkins and UCLA Anderson Forecast have partnered to create a Commercial Real Estate Survey and Index to better predict future California commercial rental and vacancy rates. This tool surveys supply-side participants – commercial developers and financiers of commercial development – for insights into their markets. Through an analysis of the Index and the incorporation of the Index into other economic forecasting models, the Survey is designed to provide more accurate information on future office, industrial, retail, and multifamily space in major California geographical markets.
John M. Tipton
Partner, Real Estate
Allen Matkins
Here are the four key takeaways from the report:
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2016
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– Tim Hutter, Partner
Allen Matkins
It is hard to envision a scenario in which COVID-19 and its fallout could remedy the underlying housing affordability issues that California faced coming into 2020. In light of that ongoing concern, we expect demand for multi-family housing to continue to be high.
San Francisco
Orange County
East Bay
San Diego
Silicon Valley
BACK TO TOP
05%
2019
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Winter 2022
Summer 2021
Winter 2021
ALLEN MATKINS | UCLA ANDERSON FORECAST
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Timothy M. Hutter
“I think the continued improvement to the state's density bonus law has been and will continue to be a real driver for new activity. It presents opportunities for properties that previously didn’t pencil because of the added density, and can also be a force for innovation at the local level as some cities improve upon and modify some of the state law language in order to give special benefits within their cities.”
Los
Angeles
San Francisco
Orange County
East Bay
San Diego
Silicon Valley
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Rental Rates
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California MULTIFAMILY Markets
Indexes of Survey RESPONSES
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Silicon Valley
East Bay
Orange County
San Francisco
Los Angeles
2022
Summer 2022
Winter 2020
Summer 2020
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What Should California CRE
Markets Anticipate in 2023?
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What Should California CRE
Markets Anticipate in 2023?
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Winter 2023
2023
2023
Retail’s Rebound Continues
Office Space: In the Doldrums with a Hint of Cautious Optimism
Industrial – A Cool Down But Not by Much
The Forecast is Heating Up for Multifamily Housing Markets
ALLEN MATKINS | UCLA ANDERSON FORECAST
The Summer 2024 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey reveals that a majority of California’s commercial real estate industry participants (71%) anticipate distress levels to rise in the coming months, with 53% predicting that new development will decrease over the next three years. As interest rates remain the primary concern for the industry, these findings signal ongoing challenges for stakeholders across the commercial real estate spectrum, as well as emerging opportunities.
Office Space
New office development remains at a standstill, with 95% of Northern California and 90% of Southern California respondents reporting no new developments in the next 12 months. However, the Summer 2024 Forecast reveals vacancy rates are expected to improve in existing properties. Seventy-three percent of Northern California respondents expect vacancy rates to stay the same or decrease, up from 50% in the previous Forecast, and signaling a plateau if not a rebound on the horizon.
PARTNER, ALLEN MATKINS
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(<50 market weakening, >50 market tightening)
Anthony R. Burney
PARTNER, ALLEN MATKINS
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The Forecast shows that 59% of respondents believe that industrial supply and demand will be balanced in the year ahead. Following recent years of robust development and growth in the sector, 69% of Northern California respondents and 50% of Southern California have no new industrial development plans.
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Industrial Space
Retail Space
Percent Without New Development Plans
SUMMER SURVEY
Alykhan Shivji
PARTNER, ALLEN MATKINS
“In the industrial space, we're seeing a lot of growth nationwide, but it's moving towards geographic locations that have strong workforces, as well as low-cost construction, low-cost regulatory compliance, and in the data center space, availability of power.”
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Following a tempered outlook earlier in the year, when plans for new development significantly slowed, the multifamily market is experiencing a resurgence despite expectations of distress in the broader market. Optimism in the sector is improving compared to the previous survey, with 65% of Northern California respondents and 57% of Southern California respondents expecting demand to grow faster than supply in the coming years.
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ALLEN MATKINS | UCLA ANDERSON FORECAST
Multifamily Space
KITTY WALLACE
Senior Executive Vice President, Colliers
“Many people would like to be in a house with a yard, but with escalated interest rates and elevated housing costs, home ownership is out of reach for most. This has led to a tremendous jump in the quantity of developers building to rent, which has served as a boon to renters and developers alike.”
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“We have seen clients, who were waiting for distressed sale opportunities, start to close on those sorts of deals, whether through a note sale or foreclosure, or just trading directly with the existing owner in an off-market transaction. I think those types of transactions are a positive sign, even if they were completed at a lower than anticipated valuation, in that it level sets expectations for the broader market. Our expectation is that this initial activity will lead to a larger wave of transaction volume bringing more potential buyers off the sidelines to start acquiring properties.”
The Summer 2024 Forecast indicates that Southern California’s retail market is poised for more development in the coming years, with 65% of respondents expecting that demand will grow faster than supply. Further, respondents’ three-year forecast shows that vacancy rates for retail space are expected to fall across Los Angeles, Inland Empire, Orange County and San Diego, with rents in these markets projected to increase faster than inflation.
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Retail Space
Evan Kantor
Head of U.S. Commercial Investment Group, Kennedy Wilson
"Retailers today are not just selling products; they are working hard to create experiences for end users."
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Past Surveys
SUMMer 2023
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Brian W. Michel
PARTNER, ALLEN MATKINS
“As retail tenants change, they want flexibility to pivot to different trends, such as entertainment-focused retail, or experience-based retail. We're seeing a lot of flexibility not only in permitted uses, but also in a lack of prohibited uses that we used to see, especially from big box tenants.”
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X
Evan Kantor
Head of U.S. Commercial Investment Group, Kennedy Wilson
“There is a major skilled labor shortage, and I think that's driving where the hubs for industrial and distribution are really growing the most."
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X
ERIN L. MURPHY
Partner, Allen Matkins
“One of the trends we're seeing in office space is that tenants are investing in smaller, better space, and there are a few ways we're seeing this. One is a flight to quality where tenants are moving to smaller space in markets that have more amenities.”
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2024
X
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Evan Kantor
Head of U.S. Commercial Investment Group, Kennedy Wilson
X
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Partner, allen matkins
Brian W. Michel
X
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Timothy M. Hutter
PARTNER, ALLEN MATKINS
Head of U.S. Commercial Investment Group, Kennedy Wilson
WINTER 2024
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2024
Brian W. Michel