Industrial and multifamily assets have been the star player of the commercial real estate market this cycle, but the latest developer sentiment survey from Allen Matkins and UCLA Anderson Forecast, which looks at key markets throughout the state of California, shows that developer optimism may be slipping for starts today that will deliver into a market three years from now.

In the industrial sector, sentiment remained optimistic throughout the state, meaning that more than half of investors are confident about building projects today that will deliver three years down the road. However, sentiment for the Los Angeles and Inland Empire markets fell compared to the survey six months ago. “Industrial has been consistently great, and it is still great,” John Tipton, operating partner at Allen Matkins, tells GlobeSt.com. “There is a little bit of a human perspective where people are impacted by what has happened in the past. There are short-term concerns with a potential trade war. Generally speaking the story with industrial is really the counter story of retail. Investors in this survey really said that the market is still really great, but they might not see it getting better.”

In the multifamily sector, on the other hand, developer sentiment fell dramatically. Compared to the previous survey six months ago, sentiment was down in every market throughout the state except Los Angeles, where sentiment was flat. In Southern California, sentiment still remained optimistic, while all Northern California markets traversed into the pessimistic zone on the chart. “Multifamily was one of the areas in the survey where I was really excited to see what comes next. In this survey, it was really a tale of two halves of the state,” says Tipton. “In Southern California, there was some drop in optimism, but everything was still strongly in the optimism camp. Then in Northern California, all of the cities were in the pessimistic camp. That was a little surprising based on the fact that the Bay Area is the tightest multifamily market of all.”