Developers remain confident that demand for California and San Diego County commercial real estate will remain strong through 2018, spurring opportunities for new construction and investment, according to the latest twice-yearly survey by the law firm Allen Matkins and UCLA Anderson Forecast.
“The favorable outlook is supported by job and income growth on the demand side and a lack of sufficient building on the supply side,” said senior economist Jerry Nickelsburg, adjunct professor of economics at UCLA Anderson School of Management, in a Jan. 27 statement announcing survey results.
Researchers said one-third of Southern California respondents, including some from San Diego County, began a new office project during the previous 12 months, up from less than one-quarter of those surveyed in June 2015. Looking ahead, 42 percent of respondents indicated they would start one or more projects within the next 12 months.
The majority of office developers surveyed viewed the outlook as promising for California’s coastal cities. However, respondents were generally more optimistic about prospects for the San Francisco Bay and Silicon Valley regions than for Southern California.
Two-thirds of survey respondents said they were planning new retail construction and significant redevelopment, with retail development showing steady growth across the state. With the exception of those based in Los Angeles, respondents in the multifamily category all anticipated tightening apartment vacancy rates over the next three years.
In the industrial real estate sector, respondents statewide indicated a strong outlook for manufacturing and warehousing facilities that support exports to Asia and Mexico, and consumer goods imported from Asia. Seventy-five percent of the survey’s Southern California and Bay Area industrial developer respondents said they are planning one or more new projects in 2016.