ALLEN MATKINS | UCLA ANDERSON FORECAST
17.9
%
%
10%
15%
35%
30%
25%
2024
I am excited to present the Summer 2025 edition of the Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey and Index. With AI, a new U.S. President, and a host of challenges, such as the recent wildfires in Los Angeles County, the world is changing rapidly. Although these developments are often national or global in nature, they deeply impact the outlook for commercial real estate in California.
Spencer B. Kallick
Here are the four key takeaways from the report:
2020
2025
2017
2018
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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
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2012
2018
2017
2019
2020
2021
2013
2014
2015
2016
100
90
80
70
60
50
40
30
20
10
0
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
Retail’s Flight to Quality
Veering in the Direction of a Turnaround
Industrial’s Positive Momentum
Activating Vitality
in the Housing Sector
ALLEN MATKINS | UCLA ANDERSON FORECAST
The Summer 2025 Allen Matkins / UCLA Anderson Forecast California Commercial Real Estate Survey finds trends highlighting cautious optimism, underpinned by stabilizing vacancy rates, generally rising rental rates, and evolving capital requirements as developers and investors respond to changing market dynamics..
Office Space
Office market sentiments are broadly improving, with positive sentiment prevailing across most regions except Sacramento, Los Angeles, and Inland Empire, where caution persists. Sentiments have improved elsewhere, although they are still negative in Los Angeles, the Inland Empire and Sacramento, while they are borderline optimistic in the East Bay.
(<50 market weakening, >50 market tightening)
The industrial sector continues to show strong momentum across California, with widespread optimism among developers and investors. Rental rates are expected to grow moderately in nearly all major markets, while vacancy rates are projected to remain steady or decline, particularly in East Bay and Silicon Valley, indicating tightening supply.
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Industrial Space
Retail Space
Percent Without New Development Plans
Summer SURVEY
Paige Gosney
Partner / Allen Matkins
“The industrial market is holding strong with a particular focus on non-infill areas, such as Banning/Beaumont and the high and low desert areas in the Inland Empire as well as the Santa Clarita Valley and east Ventura County. There is a level of price discrepancy between buyers and sellers as the parties try to determine the market’s ‘sweet spot’ but reason for
optimism is — and remains — high.”
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The multifamily outlook remains robust, with positive sentiment across all regions except for borderline sentiment in the Inland Empire. Notable improvements are seen in San Francisco and Silicon Valley. Community-oriented features closely followed by
in-home office/workspaces or co-working spaces are expected to be the top design elements influencing multifamily housing development, a majority (70%) of which are expected to be rentals.
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Multifamily Space
HEATHER RILEY
partner / allen matkins
“The biggest question in multifamily housing is how to take advantage of the recent CEQA reform bills — the response to the state’s efforts should start showing up in future surveys. In the meantime, and as the housing crisis continues, our clients are looking for any solutions that will help them bring units online as quickly as possible. Demand continues to outpace supply across the state, especially for highly amenitized rental product that offers work from home space. Despite rising costs, our clients are actively looking to build at a rate we have not seen in years.”
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Relative to the Winter 2025 Survey, sentiments remain optimistic across most markets, except for Sacramento, Los Angeles, and Inland Empire. Notably, San Francisco exhibits improved sentiment. Overall, 38% of respondents expect retail to enter a new growth development cycle in the next three years, with most of the new retail development expectations to be focused on residential-serving retail stores, excluding stand-alone big box and malls and specialty stores in existing retail districts.
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Retail Space
Brian Michel
Partner / Allen Matkins
“The retail outlook continues to remain stable as a whole, with San Diego, Orange County, the Inland Empire, parts of Los Angeles, Silicon Valley, and the East Bay expected to outperform San Francisco and Sacramento.”
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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
kevin donner
vice chairman / Newmark
“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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michael longo
SENIOR VICE PRESIDENT / CBRE
X
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PRINCIPAL / BRICKSTAR CAPITAL
DAVID MIRHAROONI
X
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shawn gehle
co-founder | Principal / officeuntitled
PARTNER / ALLEN MATKINS
WINTER 2024
0%
10%
20%
40%
50%
60%
70%
80%
30%
NorCal
SoCal
2025
SUMMER 2024
Here are the three key takeaways from the report:
X
KEVIN DONNER
VICE CHAIRMAN / NEWMARK
“Now we’re not just going to the big PE funds to buy a loan pool. We’re going to individual investors who underwrite the deal they’re interested in. Either you get paid off or buy at a discount. But that's where a lot of the deals are getting done.”
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X
David Mirharooni
Brian W. Michel
pRINCIPAL / bRICKSTAR cAPITAL
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“I see more impact from the tariffs, not because of the price of goods, but the sentiment of the outside world toward America, and tourists not coming to America because of that sentiment.”
X
Michael Longo
Senior Vice President / CBRE
“The penetration of e-commerce is a real trend that doesn't seem to be ending. Amazon certainly was in the game early, and now every other retailer has to build e-commerce into their systems. Developers view it as a growth area for sure.”
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X
sHAWN GEHLE
CO-FOUNDER | PRINCIPAL / OFFICEUNTITLED
“You have great buildings that do exist that have the potential to have a life beyond what the original use case was. I think that's a huge opportunity.”
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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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Winter 2025
Julie hoffman
Partner / Allen Matkins
“After a prolonged period of uncertainty, the office market sentiment is starting to turn a corner — albeit slowly. Developers are testing the waters again, especially in Northern California, where vacancy rates and rental rates seem to have stabilized. But broad-based recovery is still a few years out.”
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2024
SUMMER 2024
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Summer 2025 Allen Matkins/UCLA Anderson Forecast California CRE Survey Webinar
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Activating Vitality in the Housing Sector
PoDCAST:
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