July 29, 2020
In the wake of the current pandemic-induced economic recession, the Summer 2020 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey shows uniform pessimism and a drop in sentiment for developers across all commercial real estate spaces in 2023. The survey forecasts the outlook in the coming three years across the primary CRE property sectors.
Overall, survey panelists see office market demand decreasing due to work-from-home policies, industrial only moderately decreasing due to the shift to online shopping, retail continuing its downward spiral, and multifamily only moderately decreasing due to the continued shortage of housing across the state.
Given the continuing pandemic, there is much uncertainty about how the experience of working from home will affect today’s office space market. The panelists’ shared sentiment is about as gloomy as it was in December 2008, during the height of an implosion of economic activity. They see rising vacancy rates and downward pressure on rents over the next three years. This is consistent with the UCLA Anderson Forecast’s projection that a rapid return to pre-recession, office-using employment is not likely. And it is likely to drive a continued decrease in new office construction over the ensuing three years.
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