The results of the latest Allen Matkins/UCLA Anderson California Commercial Real Estate Survey are very upbeat about the state’s prospects over the next three years. Developers are confident about industrial properties and cautiously optimistic about the state’s office market going forward.
Demand is high in Los Angeles
The forecast for the industrial market was positive for all regions in the state. Developers are expecting higher export levels to drive demand for manufacturing and distribution space. Money is expected to flow in from China and other Asian markets.
Private investment in industrial buildings has increased by approximately $15 billion since 2011. The survey results also indicate that opportunities for new developments have appeared in this market and that the Inland Empire markets are positive for investors.
The forecasts for the office market are still positive but more muted since the survey was conducted in November 2012 when fears over the fiscal cliff still persisted. Projects underway and those currently in the pipeline may improve the picture throughout 2013.
John Tipton, Real Estate Development Partner at Allen Matkins, commented recently that there is still strength in the market. He went on to say that developers are taking notice that current conditions justify demolishing older buildings to make room for new construction.
Tipton considers this to be a significant sign of “the strength of the development cycle.”
Developers are optimistic that several large office developments will come onto the market this year. Demand is high in San Francisco and Los Angeles. The North County area of San Diego is another region that is seeing a lot of activity at present. Based on the survey results, developers have good reason to be optimistic about the market in 2013.
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