In a report titled “The Trump Slump That Wasn’t,” economists with the UCLA Anderson Forecast say commercial real estate remains strong throughout California.
“Given that California went heavily for Hillary Clinton, expectations ought to have changed for the worse,” said Jerry Nickelsburg, senior economist with the forecast. “Yet, the Allen Matkins/UCLA Anderson Forecast survey, taken entirely after the election, shows no such discernible change.”
“In part — perhaps large part — this may be due to the upward bump in consumer confidence and stock prices and in part because the regulatory environment in California is not likely to change much,” he added
However, Nickelsburg said the natural cycle in commercial real estate appears to be running its course with a gradual softening ahead.
“While the outlook for 2017 may look relatively good, the strong move towards online shopping, higher interest rates, a continued redefinition of the office environment and the dropping of fertility rates all transcend the election and the near term outlook as driving factors in commercial real estate,” he said.
For the San Diego area, the report indicated optimism in every category except multi-family residential, and showed particular optimism for retail developments.
Among the other findings released this week:
- The latest survey provides continued evidence of a new topping out in the office market space.
- While there have been limited new building permits for homes, California has been overbuilding high-end, multi-family housing.
- The building boom in industrial space — fed by growth in e-commerce — should continue through at least 2019.
- The trend in retail space is toward “experience shopping,” with many retailers in old-line outlets reporting flat-to-negative sales.
The forecast is based on polling a panel of California real estate professionals in the development and investment markets on various aspects of the commercial real estate market.