California Commercial Real Estate Growth Expected to Slow

California Commercial Real Estate Growth Expected to Slow


(marimba music) – One of the purposes of the survey is to give insight into
where the turning points are in commercial real estate. So far in the 10 years that we
have been taking the survey, we’ve been quite successful in
seeing those turning points. And what is significant
about the latest survey is that we’re now seeing
the turning points in most aspects of commercial real estate development in California. So we see this coming
in the next year or so. – There will be retail. It’s just a matter of how it’s integrated with online shopping, highlighted most recently by the Amazon acquisition of Whole Foods. It’s a pretty good indicator
that brick and mortar stores aren’t going anywhere. – Development is far from dead. It’s just different. A really pretty exciting movement is the craft brew movement. It’s part of that learning
and experiencing it, not just partaking. – Over the next few years
we’re seeing a forecast of about 50 to 60 million
square feet of new demand. A lot of people are
focused on that last mile and it’s really pushing land
prices to all-time highs. We’re seeing some manufacturing users elect to sell their sites to developers that are building a e-commerce because they’re recognizing
that’s the most efficient use for that site right now. – San Francisco and northern
California really turned below 50%, in San Francisco’s
case a couple years ago, and the East Bay in Silicon
Valley about 18 months ago. They have remained in that category. There’s actually been some softening and approaching of equilibrium in Orange County and San Diego. The bright spot in the survey, really, from an office perspective is Los Angeles. – There’s good things happening. The debt markets are functioning
tremendously right now and debt is a huge driver
or pricing right now. We think interest rates
will go up gradually, but it’s not gonna be a spike. And so generally we’re
seeing good conditions for the next couple of
years, because it potentially is gonna be the longest
recovery in history. – Rents are still slightly increasing but they’ve tapered off. Since rents are tapering off, the purchase prices are tapering off. But if we’re at a peak, it’s
been a plateau of a peak. – The development’s spreading out a bit. It used to really be like
an Orange County, Irvine, and Newport was really the building. Now we’re kind of moving out to Anaheim and some more affordable neighborhoods. Downtown Los Angeles,
Hollywood, West Los Angeles, Santa Monica was a lot
of our development now. A lot of it’s going, we’ve
seen south of the 10, we have 12,000 units being built and 21,000 people coming in. So we still have more people coming in. So we have like a temporary glitch. (marimba music)

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