A gloomy future is likely on the horizon for commercial real estate in California.
That’s according to results from the recent Allen Matkins/UCLA Anderson Forecast survey, which shows “uniform pessimism” for the commercial real estate market through 2023.
The demand for office space will likely drop over the next few years as employees continue to work from home and vacancy rates are expected to increase. The retail sector will also be hit hard for several reasons, including the current recession, reduced demand for brick and mortar retail and more online shoppers amid safer-at-home policies, among other factors. Two-thirds of panelists in the Bay Area and Southern California say they do not plan to develop any new properties in the year to come.
The survey also found that the demand for multi-family housing will “remain robust,” with two-thirds of Bay Area respondents and three-fourths of SoCal respondents saying the pandemic hasn’t changed their plans.
As for the country, a grim picture emerged Thursday of a U.S. economy that endured a record-shattering plunge last quarter and is now struggling to rebound as the coronavirus keeps forcing more layoffs.
The economy shrank at a dizzying 32.9% annual rate in the April-June quarter, when the viral outbreak shut down businesses, throwing tens of millions out of work and sending unemployment surging to nearly 15%. The government’s estimate of the second-quarter fall in the gross domestic product was the sharpest such drop on records dating to 1947. The previous worst quarterly contraction, a 10% drop, occurred in 1958 during the Eisenhower administration. We discuss.
With files from the Associated Press
Jerry Nickelsburg, director of the UCLA Anderson Forecast and professor of economics
Christopher Thornberg, founding partner of Beacon Economics and Director of UC Riverside Center for Forecasting