California

By Christopher Reutz, Research Director, Colliers It’s no secret the San Diego County office market experienced unprecedented conditions in 2020. Yet, brighter days may be ahead for the local office market. The COVID-19 pandemic caused many “non-essential” businesses to adopt work-from-home policies. San Diego’s office market took an incredible hit from this in early 2020, amounting to 450,000 square feet of negative net absorption. This was the biggest drop in local demand in more than six years. Last year recorded 1.8 million square feet of negative net absorption, while the first quarter of 2021 posted nearly 400,000 square feet of additional negative demand. The forecast for San Diego’s office market, though, is cautiously poised for an upswing. Demand began to pick up this last quarter as the percentage of vaccinated employees increased. Demand for office space also increased with net absorption totaling 16,000 square feet, signifying the wave of move-outs had finally passed. Additionally, while vacancy during the recession increased from 9.9 percent to a current rate of 14.2 percent, it still remains lower than historical rates recorded during the Great Recession. From late 2008 through mid-year 2011, vacancy remained in the 15 percent to 16 percent range. While the national conversation has focused …

By Cole Sweatt, Brokerage Manager, Sacramento Region, TRI Commercial Now that we’ve had the chance to analyze the data from the first two quarters of 2021, it seems that consumers and businesses are experiencing positive trends throughout Northern California. However, the initial recovery has come with challenges, including semiconductor shortages, supply chain disruptions and increased commodity prices due to a confluence of demand from consumers. We have seen relief in some of these sectors, which has led to increased production and the stabilization of commodity pricing. Although inflation should curb a bit this year, this would seem to be a temporary activity as average inflation over the next couple years is projected to be higher than the average of the prior decade. How is the office sector reacting, particularly in the capitol region near Sacramento? Office sales have been lukewarm in the first part of 2021. Investment strategies continue to change due to economic uncertainty and the long-term goals of companies occupying real estate. Employees have continued to trickle back into the office, but many employers have extended their stay-at-home and/or part-time policies through the fourth quarter of this year. As a result, the market is trending toward a flight to …