Survey: Pessimism in California commercial real estate giving way to cautious optimism

A mood of optimism is evident in the California commercial real estate industry, despite the mixed economic signals of the past sixth months, according to the latest Allen Matkins/UCLA Anderson Forecast commercial real estate survey. The survey polled a panel of industry professionals on their views of how the market will change over the coming three years.

In an essay titled "California Office and Industrial Markets: A Recovery Begins," Jerry Nickelsburg, a senior economist with the UCLA Anderson Forecast, writes that despite recent events, including the U.S. economy nearly stalling, with GDP growth below 2 percent, and shaky confidence in the various stock markets, the industry’s cautious optimism is driven by steady employment gains in coastal California.

Those gains, Nickelsburg says, have been seen primarily among users of office space, particularly in health care and professional, technical and scientific services, as well as among users of industrial space, including the export-related sectors and manufacturing.

The survey looked at the state of commercial real estate in seven California regions: Los Angeles, Orange County, San Diego, San Francisco, the East Bay, Silicon Valley and the Inland Empire.

The economists found that in the Los Angeles and San Diego office markets, vacancy rates are dropping, albeit by an insignificant amoung, but those surveyed remained highly optimistic. In the Bay Area, San Francisco developer sentiment was unaffected by slower economic growth during the last two quarters of 2011, and in the East Bay, sentiment remained optimistic, though slightly less so, with respect to rental rates. With regard to industrial space, the Bay Area professionals surveye were most optimistic about Silicon Valley and least optimistic about San Francisco.

For more videos on the findings and a copy of the latest Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey and Index, visit www.allenmatkins.com/uclasurvey.

The Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey and Index Research Project polled a panel of California real estate professionals in the office space and investment market, and asked a series of questions on various aspects of the commercial real estate market. It was initiated by Allen Matkins in 2006, furtherance of their interest in improving the quality of current information and forecasts of commercial real estate.

Allen Matkins , founded in 1977, is a California-based law firm with approximately 220 attorneys in four major metropolitan areas of California: Los Angeles, Orange County, San Francisco and San Diego. The firm’s core specialties include real estate, real estate finance, commercial finance, bankruptcy and creditors’ rights, construction, land use, natural resources, environmental issues, securities, intellectual property, joint ventures, taxation, and employment and labor law, and the firm offers dispute resolution and litigation in all these matters. For more than 30 years, Allen Matkins has helped clients turn opportunity and challenge into success by providing practical advice, innovative solutions and valuable business opportunities.

The UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation and was unique in predicting both the seriousness of the early-1990s downturn in California and the strength of the state’s rebound since 1993. More recently, the Anderson Forecast was credited as the first major U.S. economic forecasting group to declare the recession of 2001.

The UCLA Anderson School of Management : Celebrating 75 years of business beyond usual, the UCLA Anderson School of Management is among the leading business schools in the world. UCLA Anderson faculty members are globally renowned for their teaching excellence and research in advancing management thinking. Each year, UCLA Anderson provides a distinctive approach to management education to more than 1,800 students enrolled in its M.B.A., fully-employed M.B.A., executive M.B.A., global executive M.B.A. for Asia Pacific, global executive M.B.A. for the Americas, master of financial engineering, doctoral and executive education programs. Combining selective admissions, varied and innovative learning programs, and a worldwide network of 37,000 alumni, UCLA Anderson develops and prepares global leaders.