ALLEN MATKINS | UCLA ANDERSON FORECAST
17.9
%
%
10%
15%
35%
30%
25%
2024
I am excited to present the Winter 2026 edition of the Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey and Index. Change has been a constant since our last Survey in Summer 2025, with the continued growth of AI, lower interest rates, tariffs, and a changing global political climate. Here in California, the commercial real estate market is taking all of these developments in stride with a cautiously optimistic outlook for 2026 and beyond.
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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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
2022
2021
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
Signals Point to Rent Growth
Location is
the Story
Stronger Fundamentals
Still a
Bright Spot
ALLEN MATKINS | UCLA ANDERSON FORECAST
The Winter 2026 Allen Matkins/UCLA Anderson California Commercial Real Estate Survey suggests California’s CRE market is entering 2026 with measured optimism, as expectations for new development turn cautiously positive and concerns around distress begin to stabilize.
Office Space
Office market conditions remain uneven, though sentiment has improved in select regions. Developer sentiment is optimistic in San Francisco, Silicon Valley, and Orange County; borderline in the East Bay, Los Angeles, and San Diego; and pessimistic in Sacramento and the Inland Empire. Significant sentiment gains were recorded in San Francisco and Silicon Valley, while San Diego experienced a notable decline.
(<50 market weakening, >50 market tightening)
The industrial sector continues to exhibit strong and broadly improving fundamentals across California. Developer sentiment remains positive in nearly all markets and has strengthened since the Summer 2025 survey, with the notable exception of Sacramento, where sentiment has declined modestly and now sits at the border between optimism and pessimism. Elsewhere, confidence remains elevated, reflecting sustained tenant demand and relatively tight market conditions.
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Industrial Space
Retail Space
Percent Without New Development Plans
WINTER SURVEY
ANDREW MORROW
Executive Managing Director
Cushman & Wakefield
“The tariffs really affected our industrial market in the Inland Empire and across Southern California more than anything I've seen in my 20 plus years doing this. I think this year there's some renewed optimism. There's a feeling of a soft landing.”
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The multifamily outlook remains positive across both Northern and Southern California, though overall sentiment has taken minor dips relative to the Summer 2025 Survey. While still firmly in positive territory, sentiment declined slightly in most regions, reflecting a more cautious outlook heading into 2026. Overall, multifamily continues to be viewed as one of the most resilient segments of the commercial real estate market.
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Multifamily Space
Retail developer sentiment has strengthened meaningfully since the Summer 2025 Survey and is now optimistic across all California markets. The largest improvements were observed in Orange County, Los Angeles, and the Inland Empire. Northern California markets remain firmly positive, reflecting improved confidence heading into 2026.
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ALLEN MATKINS | UCLA ANDERSON FORECAST
Retail Space
“The biggest retail trend that I have seen recently is that developers are looking to lease to traditional food operators, as well as service providers and new experiential opportunities. Service providers seem to be a much bigger draw than your traditional brick-and-mortar retail.”
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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
NATHANIEL TOUBOUL
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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joey reaume
exECUTIVE VICE PRESIDENT AND PRINCIPAL / SRS INDUSTRIAL
X
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partner
allen matkins
jonathan lorenzen
X
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songyi wang
dirECTOR OF INVESTMENTS
GREYSTAR
WINTER 2024
0%
10%
20%
40%
50%
60%
70%
80%
30%
NorCal
SoCal
2025
SUMMER 2024
Here are the four key takeaways from the report:
X
Nathaniel Touboul
PARTNER / ALLEN MATKINS
“Sentiment is generally optimistic in the office sector, but varies from asset to asset, depending on its classification. Here in the Bay Area as well as in most gateway markets, class-A, highly amenitized tier-one assets in prime locations are generally in a league of their own, commanding historically high rents and low vacancy rates.”
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X
JONATHAN LORENZEN
Brian W. Michel
pARTNER / ALLEN MATKINS
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“One of the main trends I'm seeing right now in the retail sector is an increased investment in existing shopping centers, mainly those that are in good locations in close proximity to areas where customers really work and live.”
X
JOEY REAUME
Executive Vice President and Principal / SRS Industrial
“If we look at a 30,000-foot view of the overall industrial market for Southern California and the Inland Empire, 2025 was actually a pretty active year. Rental rates have, for the most part, stabilized in the West. The east we believe had a little bit of a dip in 2025. Hopefully, it will start stabilizing in 2026.”
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X
SONGYI WANG
Director of Investments / Greystar
“The Bay Area has continued to recover and is the best performing market across the West Coast and nationally. Both San Francisco and San Jose saw really strong rent growth in the spring and summer of 2025.”
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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
Activating Vitality in the Housing Sector
PoDCAST:
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Winter 2025
JOON CHOI
Principal / Harbor Associates
“We're seeing a lot of investment interest picking up in office, not only from owner-users and private high net worths. We're also starting to see institutions coming back to office. Some of the institutional funds that have been recently raised are now able to invest in select office deals.”
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2024
SUMMER 2024
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Summer 2025 Allen Matkins/UCLA Anderson Forecast California CRE Survey Webinar
WEBINAR:
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SUMMer 2025
90%
SANDY JACOBSON
Partner / Allen Matkins
TIMOTHY HUTTER
Partner / Allen Matkins
“There continues to be a strategic or financial advantage for the affordable housing developers who are able to set up a capital stack that's less reliant on market forces and on market rates.”
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TIMOTHY HUTTER
partner
allen matkins
“The tariffs really affected our industrial market in the Inland Empire and across Southern California more than anything I've seen in my 20 plus years doing this. I think this year there's some renewed optimism. There's a feeling of a soft landing.”
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sandy jacobson
partner
allen matkins
“The tariffs really affected our industrial market in the Inland Empire and across Southern California more than anything I've seen in my 20 plus years doing this. I think this year there's some renewed optimism. There's a feeling of a soft landing.”
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Winter 2025
joon choi
PRINCIPAL
HARBOR ASSOCIATES
“The tariffs really affected our industrial market in the Inland Empire and across Southern California more than anything I've seen in my 20 plus years doing this. I think this year there's some renewed optimism. There's a feeling of a soft landing.”
Learn more
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