LOS ANGELES — The June 2011 Allen Matkins UCLA Anderson Forecast California Commercial Real Estate Survey reports increased optimism in many of California's major markets. The report notes that Class A asset values have risen to near-peak levels over the past 18 months, which may signal either increased investor optimism or the threat of a new asset bubble. The report also notes, however, that this increase in values is not supported by today's rental and occupancy rates.
While occupancy and rental rates may not account for higher asset prices, the forecast believes developer optimism may have played a role. It predicts San Francisco and Silicon Valley will be the first California markets to reach healthy levels of construction activity, with Los Angeles and San Diego close behind. The growth of the manufacturing industry has also positively affected California's industrial sector, particularly in Silicon Valley and Orange County.
“Optimism with respect to office and industrial market fundamentals in 2013 and 2014, which first appeared a year ago, is an important precursor to the re-start of commercial construction,” said Jerry Nickelsburg, senior economist, UCLA Anderson Forecast, in a statement. “While the overall sluggishness of the general economic recovery will engender a slow recovery in commercial real estate as well, the prospects are improving.”