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Press
Releases
FOR
IMMEDIATE RELEASE
Survey
Reveals Los Angeles and San Diego Commercial Real Estate Markets
Are Moving Past the Credit Crisis
LOS
ANGELES, June 10, 2008 - Some office space markets
in California are holding their own, according to the latest Allen
Matkins / UCLA Commercial Real Estate Survey. The survey, conducted
for the third time over the past two years, polled panelists in
Los Angeles, San Diego, and Orange County, and for the first time,
San Francisco. Results of the survey reveal that in Los Angeles
and San Diego, there was a sense that while credit conditions were
going to remain tight for the near term, the credit crunch was
starting to lessen. In Orange County and San Francisco, the panels
believed the opposite it true.
“The Allen Matkins / UCLA Forecast Survey looks forward
to market conditions in 2011 and asks the regional panels for their
views of changes in supply and market conditions. What is interesting
about this survey is that by looking beyond the near term it picks
up the impact of today’s economic conditions on longer run
market conditions,” said Jerry Nickelsburg, economist, UCLA
Anderson Forecast and author of the survey results summary. “In
the case of San Francisco there appears to be a difference of opinion
between the panel’s view and the economic fundamentals from
our forecasting models. As this unfolds, some interesting investment
opportunities could develop.”
Los Angeles
The panel does not believe the Los Angeles market will tighten
between today and 2011. The survey results imply an average vacancy
rate in Los Angeles at levels lower than experienced in the last
20 years, and rental rates consistent with a stable future evolution
of market fundamentals. Today’s market represents a healthy
office space market and with new supply expected to come on the
market over the next three years at a rate just about equal to
the expected increase in demand - the market will remain healthy.
San Diego
The panel was
pessimistic last December about San Diego’s
office market. In the latest survey, composite index, rental rate
index, and vacancy rate index are higher. The panel sees the market
tightening out to 2011 with both occupancy rates and rental rates
higher. “We see the turnaround as a result of the growth
in office using employment,” said Nickelsburg. “Although
San Diego did not make much progress in the first quarter of 2008
in terms of overall job growth, outside of finance, office space
using employment grew in the first quarter 2008 from the first
quarter 2007 by 1.5%.”
Orange County
The survey finds that developers are pessimistic about this market
and shows downward pressure on the price of land for office space
development signifying a weak market. With higher financing costs
and slack demand this is a market where investors will have to
choose their projects carefully.
San Francisco
For the first time, the San Francisco office market has been added
to the survey. The panel’s analysis of the current San
Francisco market is similar to the Orange County market except
that land costs are seen to be a more significant factor in the
supply equation. The panel forecast that occupancy rates would
go up at the same time as real rental rates are going down. This
is characteristic of a market which is weak. But office using
employment has been increasing in recent years and real rental
rates and occupancy rates are finally going up again “What
is interesting here is that the recovery from 2001 downturn,
if it continues apace, could result in a shortage of office space
by 2011 – the opposite result of the panel’s assessment – as
a consequence of the pessimism of investors and financiers,” said
Nickelsburg.
The Allen Matkins/UCLA Anderson Forecast California Commercial
Real Estate Survey and Index Research Project polled a panel of
California real estate professionals in the office space and investment
market, and asked a series of questions on various aspects of the
commercial real estate market. It was initiated by Allen Matkins
in 2006, furtherance of their interest in improving the quality
of current information and forecasts of commercial real estate.
Future surveys will focus on other real estate markets and will
feature additional cities.
Results of the Allen Matkins/UCLA Anderson Forecast California
Commercial Real Estate Survey will be discussed at the UCLA Anderson
Forecast Conference on June 18, 2008 at UCLA. More information
can be found at www.uclaforecast.com.
About Allen Matkins
Allen Matkins Leck Gamble Mallory & Natsis LLP, founded in
1977, is a California law firm with approximately 240 attorneys
practicing out of seven offices in Los Angeles, Orange County,
Century City, Del Mar Heights, San Diego, San Francisco, and Walnut
Creek. The firm's broad based areas of focus include corporate,
real estate, construction, real estate finance, business litigation,
taxation, land use, environmental, bankruptcy and creditors' rights,
and employment and labor law. The firm has also been ranked as
the #1 real estate firm in California by Chambers & Partners
for the last six years.
About UCLA Anderson Forecast
UCLA Anderson Forecast is one of the most widely watched and often-cited
economic outlooks for California and the nation and was unique
in predicting both the seriousness of the early-1990s downturn
in California and the strength of the state’s rebound since
1993. More recently, the Forecast was credited as the first major
U.S. economic forecasting group to declare the recession of 2001.
Visit UCLA Anderson Forecast on the Web at http://uclaforecast.com.
About UCLA
Anderson School of Management
UCLA Anderson School of Management, established in 1935, is regarded
among the very best business schools in the world. UCLA Anderson
faculty are ranked #1 in "intellectual capital" by
BusinessWeek and are renowned for their teaching excellence and
research in advancing management thinking. Each year, UCLA Anderson
provides management education to more than 1,600 students enrolled
in MBA, Executive MBA, Fully-Employed MBA and doctoral programs,
and to more than 2,000 professional managers through executive
education programs. Combining highly selective admissions, varied
and innovative learning programs, and a world-wide network of
35,000 alumni, UCLA Anderson develops and prepares global leaders.
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