Investment sentiment for California office product is soaring, according to the latest survey from Allen Matkins and the UCLA Anderson Forecast. While investors are becoming bullish on office product in all of the major submarkets, developers aren't as bullish on new product in some markets. Overall, new construction this year will stay neutral, with activity healthier in some areas than others.
“In Northern California, more developers are staying on the sidelines when it comes to construction,” John Tipton, a partner at Allen Matkins, tells GlobeSt.com. “In Los Angeles, however, developers have been more bullish.” This isn't surprising considering that sentiment in Northern California only recently rebounded, driven largely by the new tax plan. In the last survey, taken six months ago, investment sentiment was down in Northern California. As demand increases, development could rebound as well. In Los Angeles, sentiment remained positive.
While new construction isn't ramping up, developers that do have new projects under construction are comfortable building speculative developments in dense urban areas, where demand is highest. While pre-leasing efforts won't go away on new construction, pre-leasing is not going to as prevalent in dense urban areas. In those markets, developers are willing to build spec without an anchor tenant attached to the project, according to Tony Natsis, a partner at Allen Matkins, in a commentary video about the survey results.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.