California Commercial Real Estate Survey Finds Developers Optimistic
The current survey, taken in November 2012, remains predominately upbeat, with developer sentiment remaining optimistic towards multifamily and industrial asset types and cautiously optimistic toward commercial office markets.
MULTIFAMILY HOUSING: The survey indicates that multifamily development continues to boom with increased housing demand and decreasing vacancy rates of 4.5 percent in multifamily markets. This turnaround in multifamily residential construction is being driven by high occupancy rates and rising rents, particularly in the Bay Area, as household formation begins to rebound in California.
INDUSTRIAL: Industrial markets had positive forecasts in all regions, due in part to anticipated increases in California exports driving demand for distribution and manufacturing space, particularly from China and other Asian markets.
OFFICE: Industry sentiment for the office sector three years out, while still optimistic, shifted downward from six months ago. This, however, may reflect developers’ concerns over the looming fiscal cliff, as the survey was taken in November 2012. Projects coming out of the ground, as well as those in the pipeline, could prove forecasters wrong in 2013 and beyond.