ALLEN MATKINS | UCLA ANDERSON FORECAST
17.9
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10%
15%
35%
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2024
As we begin 2025, I am excited and honored to lead my first publication of the Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey and Index. After taking the reins from my partner John Tipton’s capable hands, I present our Winter 2025 edition, which looks at future development in office, retail, industrial, and multifamily spaces and helps predict future California commercial rental and vacancy rates. This survey is now in its 36th edition, and I look forward to continuing what has become a mainstay for California commercial real estate participants.
Spencer B. Kallick
Here are the four key takeaways from the report:
2020
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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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“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
Click on the markets to find out more
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Rental Rates
VACANCY Rates
California MULTIFAMILY Markets
Indexes of Survey RESPONSES
San Diego
Silicon Valley
East Bay
Orange County
San Francisco
Los Angeles
2022
Summer 2022
Winter 2020
Summer 2020
2022
2021
What Should California CRE
Markets Anticipate in 2023?
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What Should California CRE
Markets Anticipate in 2023?
CLICK HERE
Winter 2023
2023
2023
Doubling Down on Retail
Office is Not Dead. Office is Alive.
Forget Tempered Optimism – Industrial’s Outlook is Positive
Inflation and Rising Costs Won’t Slow Multifamily Momentum
ALLEN MATKINS | UCLA ANDERSON FORECAST
The Winter 2025 Allen Matkins / UCLA Anderson Forecast California Commercial Real Estate Survey suggests a positive uptake in new projects started last year and projects expected to be started this year. Sentiments about the next three years are much more positive in both commercial and multifamily markets, relative to the 2024 Summer Survey.
Office Space
The office sector is still in recovery mode, but there are positive signals for the market, especially in Northern California, with 67% of survey respondents saying that demand will grow faster than supply. The picture is more nuanced in Southern California with 43% saying that they expect vacancy rates to decrease and 35% saying that supply will outpace demand.
(<50 market weakening, >50 market tightening)
With vacancy rates largely stable in the industrial sector, the outlook in both Northern and Southern California is positive following a period of tempered optimism. Excitement is clearly building around the digital economy. The survey showed large increases in respondents naming data centers as the primary driver of industrial development since our previous survey (from 17% to 38%).
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Industrial Space
Retail Space
Percent Without New Development Plans
WINTER SURVEY
SCOTT SOWANICK
Managing Director and Partner
Stream REALTY PARTNERS
“You need to be laser-focused on the due diligence of a future new project. And that's not just doing your belt and suspenders due diligence on the property, but you should spend significant time understanding the exact lead agency, the town, the municipality, and the county where you are operating. That needs to factor into your risk calculation about whether or not you're going to move forward with developing that new project.”
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Although inflation and rising costs continue to be an issue, multifamily development has not slowed. Vacancy rates across the state are showing improvement, particularly in San Francisco. The recent Los Angeles Wildfires will continue to increase demand in the multifamily sector, as well as the ongoing housing shortage across the state.
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ALLEN MATKINS | UCLA ANDERSON FORECAST
Multifamily Space
JENNIFER JEFFERS
senior counsel / allen matkins
“In California, multifamily development is expected to increase this year. San Diego, the Inland Empire, and San Jose dominated California's multifamily development pipeline across 2024 in terms of percentage of inventory under construction.”
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The survey underscores that retail, residential, and other commercial functions are blending together, driven by consumer demand for convenience and offerings beyond traditional shopping. Residential-serving retail is the primary driver of new retail development (53%), reflecting a continued shift towards mixed-use environments and the integration of retail into residential areas.
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ALLEN MATKINS | UCLA ANDERSON FORECAST
Retail Space
SANDY JACOBSON
Partner / Allen Matkins
“Developers are looking to build out their shopping centers with
a variety of service-oriented tenants that help support the community around them, which helps drive foot traffic into
the center. They're looking for childcare centers and
learning centers, for example, but they're also looking to
grow the restaurant and food-service footprints because these uses also help to create heavier foot traffic for centers.”
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Past Surveys
SUMMer 2023
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“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.”
“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."
X
daniel wagman
Partner / Pendulum Property Partners
“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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Jonathan Shardlow
Partner / allen matkins
X
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Principal / Runyon Group
joey miller
X
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SPENCER B. KALLICK
PARTNER / ALLEN MATKINS
PARTNER / ALLEN MATKINS
WINTER 2024
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2024
SUMMER 2024
Here are the four key takeaways from the report:
X
SPENCER B. KALLICK
PARTNER / ALLEN MATKINS
“I think what's interesting in California, in particular, is in addition to the tremendous need for housing, the state has gotten very serious about incentivizing and frankly requiring cities to plan for housing.”
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X
JOEY MILLER
Brian W. Michel
PRINCIPAL / Runyon Group
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“No amount of technology will take away the desire to go out and do something. People want to be in an aesthetically pleasing, safe shopping environment. We try to make that happen and provide an element of discovery. When you come to one of our properties, we hope you see a store or some products you haven't seen before.”
X
JONATHAN SHARDLOW
Partner / allen matkins
“Key trends we're seeing in the industrial sector relate to a reassessment of location and the types of users that are out there in the industrial marketplace. With a reassessment of location, we're seeing users look further away from the ports, even though it's more advantageous to be closer to the ports, because there's not a lot of product in the infill markets.”
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X
DANIEL WAGMAN
Partner / Pendulum Property Partners
“Tenants know that deals are coming in terms of cheaper rents. With many landlords still owning at an unrealistically high basis, there is an inability to meet the market on rent, creating a misalignment of interests between landlords and lenders. As lenders take things back or sell properties, a re-set basis will allow ownership to meet the market on rent. The exception to this is trophy product in premier markets – they have been able to consistently outperform.”
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Principal, Runyon Group
WINTER 2024
Although inflation and rising costs continue to be an issue, multifamily development has not slowed. Vacancy rates across the state are showing improvement, particularly in San Francisco. The recent Los Angeles Wildfires will continue to increase demand in the multifamily sector, as well as the ongoing housing shortage across the state.
Partner, Real Estate
Allen Matkins
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Doubling Down on Retail
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California Real Estate Outlook
for 2025 & Beyond
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