The mood in office development has risen. The latest installment of the Allen Matkins– –UCLA Anderson Forecast Commercial Real Estate SurveyOffice developers across California are confident of delivering new office products in 2022. This is an improvement in sentiment among office development from the last survey six months ago, and a sign that developers are expecting economic problems to emerge and end by mid-2022.
“Right now, it's really important to remember that this is a three year lookout. We asked the panelists to give us their outlook for June 2022. " John Tipton, a partner at Allen Matkins, tells GlobeSt.com. “The UCLA Anderson forecast predicts a slowdown in 2020 and then a pickup. This poll shows that people believe that in 2022 we will get out of the rough patch. Office is perhaps the paradigm case for this. "
Orange County is the only market in California with a pessimistic outlook for new office development. Only 47% of respondents have a positive outlook on new office development with a delivery in 2022. More than half of developers in the other markets studied, Los Angeles, San Diego, San Francisco, Silicon Valley and East Bay see the development new offices positive. “We didn't see much development in California. The development has remained relatively moderate, so we are not in a place where we have a lot of excess vacancy, ”says Tipton. “Given the reasonable rate of growth, Office is following the prototypical model of restoring the recession. We saw that this trend of optimism has subsided and now it has risen again for 2022. "
California is currently operating with historically low unemployment rates, which has resulted in fierce competition for new talent. For this reason, office developers focus on creating high quality, comfortable spaces. "Everyone goes to a better-equipped room concept," says Tipton. “I now have so many customers getting into this area. The space requirements are not increasing, but the common areas and amenities are really growing. The owners understand that there is a demand in the market for this type of space. "
While there is low unemployment today, Tipton also notes that a new entry into the labor market will also help create growth and demand for more office space. "In general there is population growth and that is relevant here," says Tipton. “Developers expect rental rates to rise faster than inflation, but they are inconsistent when it comes to improvements in occupancy. However, occupancy in the office market is currently good. "
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