Commercial Markets Unmoved by Tariffs, Tax Cuts

The Daily Transcript (July 26, 2018) Events as far ranging as tariffs and tax cuts don't seem to have moved influenced the sentiment for office, industrial, retail or multifamily projects in San Diego or the rest of Southern California. The latest Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey found that office markets have topped out, but are not tumbling; retail is, in fact, tumbling; and multifamily housing and industrial space will remain hot. "The overall takeaway is steady as she goes," said John Tipton, a partner with Allen Matkins Leck Gamble Mallory & Natsis' real estate practice. That said, Gary McKitterick, also an Alan Matkins partner, noted in the report that it has become increasingly difficult to build. "The shortage of manpower, along with the cost of labor and the cost of construction, are causing pressures on the real estate industry that we've not seen in years," he said. Allen Matkins partner Sandy Jacobson cited increased interest rates as another reason it is getting more difficult to start, let alone complete, a project. As for office development prospects, the UCLA Anderson Forecast found the markets, as measured by occupancy and rental rates, today are as good as they are going to get for some time. "We've hit an apex with office development," Tipton said. "Now, apex means the top, the zenith. It doesn't mean that the world is ending."