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Commercial real estate development slowing in California

Southern California commercial real estate has been experiencing a significant boom over the last several years, but some are warning that the trend may be slowing down as the overall pace of the U.S. economy continues to slow. The UCLA Anderson Forecast recently released its biennial survey of real estate leaders, indicating the upward trend in California real estate is losing momentum.

The survey covers six major markets — San Diego, Orange County, Los Angeles, San Francisco, the East Bay and Silicon Valley. Of the areas surveyed, all six indicated a decline in positive developer sentiment, one of the first-occurring factors in a softening real estate market. This comes as a surprise to many in the commercial sector, as some areas are seeing surges in commercial space demand. This is attributed to high-visibility corporations eyeing Orange County for headquarters locations over more traditional areas like Silicon Valley. Still, the trend across the state seems to seems to be slowing.

Some have been quick to point out that this does not mean that the market is necessarily collapsing, but more likely leveling out. Also, according to the survey, developer sentiment in industrial and multi-family housing sectors continues to be quite strong. While commercial real estate development may be topping out for the time being, multi-family development appears to pushing ahead as strongly as ever.

As commercial real estate slows down, landlords may be more likely to wring as much as they can from existing tenants, pouring over their leases for ways to add charges here and there. An experienced commercial real estate attorney can help ensure that your landlord-tenant relationship remains respectful, should your landlord seek to take advantage of you.

Source: TIMES of Sand Diego, "California Commercial Real Estate Boom May Be Topping Out," Chris Jennewein, July 20, 2016

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