UCLA: Optimistic post-pandemic outlook for California commercial real estate

Construction underway at Scripps Ranch Hub in 2021. Courtesy of Sudberry Properties

The recovery from the pandemic recession has been positive for California commercial real estate, with solid industrial and multi-family housing and retail experiencing “new demand not experienced in years.”

That was the word Wednesday from the Allen Matkins/UCLA Anderson semi-annual forecast based on surveys of California real estate professionals.

“Unlike other recessions, the most recent one was not characterized by a decline in purchases of goods and a slowdown in housing markets,” according to the forecast. “The reverse has actually happened, and this has led to continued growth in multi-family housing development and industrial space construction, while lingering pessimism for retail and office construction has subsided. is reversed.”

The most surprising part of the forecast was the renewed optimism for commercial properties despite the growth in e-commerce.

Forecasters cited three factors: a return to the office in downtown areas, new housing construction across California, and the reconfiguration of retail establishments to a more open-air post-COVID design.

But e-commerce continues to drive demand for industrial space across the state, with the survey finding the highest level of optimism since 2015.

“It is clear that the construction of new industrial spaces still has years before reaching its zenith,” according to the forecast.

Commercial real estate professionals were also optimistic about the future of office space, noting that many businesses are redesigning their properties to support hybrid working models.

San Diego was considered the best market for office space in the aftermath of the pandemic due to its industrial mix.

“San Diego’s booming technology and life sciences sectors have contributed to a rebound in demand for office space,” according to the forecast.

As prices for single-family homes have soared during the pandemic, forecasts have revealed that multi-family dwellings are rising again because young workers are expected to return to urban cores.

“Fully 45% of Bay Area and Southern California developers on our panels plan to launch multiple developments over the next 12 months,” according to the forecast. “Demand is expected to exceed supply through 2024.”

The Allen Matkins/UCLA Anderson Forecast surveys a panel of California real estate professionals to research their expectations over a three-year period. The biannual survey was started by Allen Matkins and the UCLA Anderson Forecast in 2006.







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