Californian Developers Pessimistic on State of CRE Market

Mortgage Professional America (July 29, 2020) Commercial real estate developers in California are unified in their pessimism when looking forward to the next three years. As the economy continues to feel the burn from the COVID-19 pandemic, the Allen Matkins/UCLA Anderson Forecast California CRE survey found an overall drop in sentiment for developers across the commercial real estate space into 2023. The forecast is done biannually, using a three-year time horizon was chosen to approximate the average time a new commercial project requires for completion, and looks at each sector: office, retail, industrial and multifamily. According to the survey report, the experience of working from home will allow firms to demand less office space, but that doesn’t come without sacrificing corporate culture, on-the-job training, and a true understanding of a new hire’s work ethic. Unsurprisingly, the retail sector saw the most pessimism, with the current recession tripling down on the struggles the sector was already facing before the pandemic. “There will be economic carnage; when big events like this happen, it washes over the landscape like a tidal wave and even some good economic decisions become a casualty, but then things kind of resettle and we will get back to our base patterns,” said John Tipton, partner, real estate development at Allen Matkins.