Office Market Sentiment Weakens

Sentiment for all six office markets in California surveyed – including the Bay Area, Silicon Valley, and Southern California – has dropped as of late. Results indicate these markets have peaked and are entering a more moderate part of the cycle over the next two years. In the Bay Area, although developers are not suggesting an immediate cut-back in their development activity, predictions for the next two years see a cooling down of the market. Similarly, Southern California panelists indicate an increase in weakness between now and 2021. While actual and planned building is currently higher, developers see rental rates being eroded by inflation and vacancy rates increasing from today.

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