California commercial real estate space improves

Jessica SarterCommercial Lending

The commercial real estate market has shown steady signs of improvement in recent months, as the regions hardest hit by the recent financial crisis are finding ways to decrease vacancies. As a result, commercial real estate loans will likely experience a similar bounce-back in the coming months.

Allen Matkins and UCLA Anderson recently announced the joint California Commercial Real Estate Survey, which revealed increased optimism in the market.

“Since the end of the recession we have seen developer optimism spread to all markets and types of commercial space along with an increased willingness to go forward with new development,” UCLA Anderson Forecast Senior Economist Jerry Nickelsburg explained.

The two organizations noted that high optimism in the commercial office space development sector over the past few years did not necessarily lead to tangible growth, though the survey indicated those sentiments will now bolster construction of new real estate.

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The survey found 70 percent of respondents intend to begin developments in locales such as San Francisco and Los Angeles within the next year. Additionally, much of the optimism in the industrial real estate market seems to be the result of strong occupancy rates of 96 percent in Orange County and Los Angeles.

“This growth in multi-family housing is encouraging. It is in markets where there have been substantial job gains – especially for younger workers who prefer to rent apartments in urban areas – and where property values are high,” John Tipton, partner at Allen Matkins, said.