Despite January being a generally slow month for real estate, California commercial real estate markets are still trending upward according to the latest Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey. The survey was conducted after the 2016 election and it appears that the market has not been negatively affected by the results and “shows no discernable economic shift, despite Hillary Clinton being the heavy favorite among state residents.”
Jerry Nickelsburg, adjunct professor of economics at the UCLA Anderson School of Management and a senior economist with the UCLA Anderson Forecast, believes that these findings are due “to the upward bump in consumer confidence and stock prices and in part because the regulatory environment in California is not likely to change much. While the outlook for 2017 may look relatively good, the strong move towards online shopping, higher interest rates, a continued redefinition of the office environment and the dropping of fertility rates [remain the] driving factors in commercial real estate.”
Also according to the survey, industrial space developers indicate little change in sentiment compared to last year. Industrial markets, particularly the warehouse segment, are still booming.
“This optimism expressed in each of the regions surveyed continues to be manifested in new building.” according to the UCLA Anderson Office of Media Relations. “With extremely low vacancy rates at present and an optimistic view by developers, the building boom should continue through at least 2019.”
Also according to the survey, multi-family developer optimism has been consistently strong over the first four years of the survey: “The demand for multi-family housing tends to follow job growth in the more densely populated regions of California. Hence, one would expect multi-family housing demand to remain strong and builders to continue to churn out new units. But survey results suggest this market has topped out as well. This is one case where the trends were not there prior to developer sentiment turning down.”