Developer sentiment continues to show signs of optimism and solid indications of impending new commercial development, particularly in the multifamily housing sector, according to the current semi-annual release of the Allen Matkins/UCLA Anderson California Commercial Real Estate Survey.
‘Since the end of the recession, we have seen developer optimism spread to all markets and types of commercial space along with an increased willingness to go forward with new development,’ says UCLA Anderson Forecast Senior Economist Jerry Nickelsburg.
Seventy percent of the survey participants in San Francisco, Silicon Valley and Los Angeles said that they plan to begin new multifamily housing developments in the next 12 months. The survey's authors determine that this rise in multifamily residential construction is being driven by high occupancy rates and rising rents, particularly in the Bay Area, as household formation begins to rebound in California.
‘This growth in multifamily housing is encouraging,’ says John Tipton, partner at Allen Matkins. ‘It is in markets where there have been substantial job gains – especially for younger workers who prefer to rent apartments in urban areas – and where property values are high.’
Furthermore, approximately 25% of the survey participants are planning to start new office developments in the coming 12 months.