What projects could still provide a healthy profit margin here in California? In 2018, a study was done to make that determination. Keeping track of trends by reviewing these types of studies could help developers choose projects that could provide the investment and profits they seek.
For instance, brick and mortar retail establishments may not be the best option right now. Re-purposing them might allow for their continued success, but starting from scratch may not provide the best opportunities. The same could be said for commercial office buildings. Rental rates do not appear to be increasing anytime soon, but construction costs probably will. This limits the amount of return a developer could receive on this type of project.
Warehouses, on the other hand, could provide those returns. Online shopping may hurt traditional retail centers, but it helps warehouse centers. All of those goods bought online have to come from somewhere after all.
Another development area that could see a rise in the coming years is the multi-family housing market. People always need a place to live, and with housing prices so high, renting might be more attractive to many people. For those who buy, purchasing a unit in a multi-family building often provides amenities traditional homeowners may not get.
California developers have always known that they have to consider the current market in order to successfully choose their next projects. That has not changed. In fact, the better the read of the market, the better the chances are that a project will succeed.
