10 minute read
California CRE: Future Looks Better
California Buildings • Q3 2022 Industry News
California Commercial Real Estate Slowing, But Future Looks Better
California commercial real estate executives are “cautious” about the next 12 months but are “more optimistic on all fronts about the coming three years,” according to the Summer 2022 Allen Matkins / UCLA Anderson Forecast California Commercial Real Estate Survey.
A report of the survey says, “Industrial markets, which have perennially experienced very low vacancy rates, remain poised...for a good run of new building and superior returns. Multifamily housing has rapidly bounced back from a ‘falling-rent’ hiatus and is also in for a run of new project development. Retail markets are showing signs of a new growth cycle. The only negative news in the latest survey is that a turn in both retail and office markets may take longer than previously predicted. This would be a direct consequence of continued waves of the pandemic and a much more uncertain economic and geopolitical environment than six months ago.”
Allen Matkins Partner John Tipton adds, “The pandemic continues to affect each market sector in different ways. While some continue to thrive, such as industrial and multi-family, others, like office and retail, will need more time to determine their trajectories.”
Multifamily Prospects Bullish
The report says, “Despite the pandemic-induced demand for homes in the suburbs and a continued work-from-home culture, our multi-family panels remain bullish about the coming three years. In every market, including the pandemic work-from-home hit San Francisco market, there are forecasts for both rental rates increasing faster than the rate of inflation and vacancy rates falling between today and 2025.
“Although the continued arrival of waves of the pandemic delayed some return to the office, the reopening of city amenities and the creative and social value derived from urban experiences are attractors that are expected to induce increased density in multi-family living in the near
future, particularly among younger workers. Multi-family housing close to employment centers and transportation corridors is also attractive for many whose alternative would be long commutes from the outlying suburbs even if such a commute were to be only a few times per week.”
Pessimism Continues for the Office Sector
“Optimism about the office market through 2024 has now turned to pessimism about the same market through 2025 in Southern California and a more “The pandemic continues to affect each market sector in different ways. While some continue to thrive, such as industrial and multi-family, others, like office and retail, will need more neutral view in Northern California,” the report says. “What is clear is that the increased uncertainty about near term economic prospects has led to a more cautious time to determine their trajectories.” view of summer 2022 investment in office space. Is this a temporary hiatus in activity for some? That is the open question raised by the survey. In Northern California, 3/4 of the panelists are now forecasting that by 2025 demand will have grown at least as fast as supply. “The sole exception is the Sacramento market where there is a high dependence on the demand for space by state government. Even though the state general fund is in surplus, cost saving measures and tele-work by a significant number of state employees has resulted in more than 20 government office leases not being renewed. For the Bay Area, the panels are forecasting rental rates to remain soft, if not deteriorate, but occupancy rates to continue to improve. For the three Bay Area markets, the composite measure of sentiment has remained slightly optimistic though there are not yet plans in place to increase the rate of office development. “The office market may not be back in Northern California just yet, but office development is projected to be increasing by the end of 2025. In Southern California, the panelists’ views are less pessimistic, the report continued and adds, The sentiment index moved from positive to negative territory for each of the four markets surveyed.”
California Buildings • Q3 2022
JLL Offers Hybrid Workplace Advice
In its “Better Hybrid Workplace” guide Jones Lang LaSalle says, “New expectations are transforming the purpose of the office.”
“As the hybrid workplace becomes the norm, your role will move away from traditional CRE duties, as will the metrics you monitor and use. Distributed workforces and ebbs and flows in occupancy—hallmarks of the hybrid workplace—will require digitization and automation tools that support them. "Remote work will intensify the need for human connection, and you’ll be part of creating engaging spaces and improving the employee experience when workers are in the office. In a recent JLL survey, employees around the world revealed they now prioritize “soft benefits” like work-life balance, feeling engaged and connected to others, and having a sense of purpose in their jobs. Reconfiguring office space
“As the hybrid workplace takes root, the purpose of the office will evolve. Workers won’t be in the office every workday; thus, the need for the office to boost productivity, stimulate innovation, and facilitate collaboration intensifies. People will expect the office experience to center around health and well-being, especially in light of the pandemic, which resulted in standards and protocols that may be permanent. “Working from home lacks essential elements of working in the office— elements we all took for granted before the pandemic, even in the least sophisticated of offices. Things like shared desks and densely populated individual workspaces are untenable now. The inherent benefits of in-office work, integral to the employee experience, will need to be amplified to make up for less time spent each week in the office, as well as the new purpose it serves.”
For a fuller explanation, visit: JLL Technologies | Real estate, facilities, and property tech.
California Commercial Real Estate (Continued from page 26)
“Though this turn of events has slowed the return to the office there are signs that it is temporary. Some large public companies are putting into place plans to return their workforce to the office. Increasingly companies are seeing the value of officecentric work for establishing culture, creating loyalty, inducing creativity and the mentoring of young employees. Likely, the tools learned during the strict work-from-home episode of 2020 will allow for more flexibility and less than full time in the office for many people. And the configuration of the office will surely be different post-pandemic. The implication of these factors is that there will ultimately be a need for new office development consisting of the remodeling of existing offices, the building of satellite offices to reduce employee commute times, and the creation of new mixeduse office complexes.” n
California Buildings • Q2 2022 PRODUCT FOCUS
Mobile Storage Solutions
Every project has its own unique challenges, and keeping tools and equipment organized is just one of the many important aspects of a well-managed job site. National Construction Rentals offers mobile storage containers in many sizes, so additional room is never an issue. Whether it’s 10, 20 or 40 feet in length, every unit offers the maximum in usable space. For additional
information, call 800-352-5675 or visit www.rentnational.com today.
Water-Tight Seal With No VOCs!
Strataflex® is a peel-andstick, sheet membrane is designed for use on interior or exterior surfaces that require waterproof protection. Strataflex features a 2” double stick lap joint that creates a water-tight seal, allowing for immediate flooring installation as soon as it is applied. Strataflex is certified Clean Air GOLD and contains no VOCs in compliance with CDPH Standard Method v1.2 for private office, school classroom, and single-family residences. The ultimate solution for apartments, condominiums, restaurants, bathrooms, kitchens and any commercial or residential installations requiring waterproof protection.
Visit www.nacproducts.com to learn more. Krieger Specialty Products' Door & Window Products
Since 1936, Krieger Specialty Products has been a leading manufacturer of specialized door and window products for acoustical, blast resistant, bullet resistant, radio frequency shielding, thermal shielding, tornado, and hurricane applications. Built to your precise specifications, Krieger doors and windows have been the choice for premier buildings in California and throughout the world.
Learn more at https://www.kriegerproducts.com or call 562-695-0645.
California Buildings • Q3 2022
Kings III's Emergency Monitoring Reduces Risk and Mitigates Liability Exposure
Elevator malfunctions are inevitable. Entrapments coupled with health emergencies and a wide spectrum of passenger reactions can quickly become an ongoing headache. Kings III helps you reduce risk and mitigate liability exposure via its class leading emergency monitoring for help phones in elevators, stairwells, parking structures and more. Its concierge level service helps you manage tenant experience, while also reducing your risk and liability with value-added benefits not common in the monitoring space.
For more information, visit www.kingsiii.com. PAC-CLAD | Petersen NEW PVDF Ore Finishes
PAC-CLAD’s NEW Ore finishes provide the look of natural metal patinas with the durability and consistency of a PVDF finish. Unlike expensive and unpredictable natural metals, these 16 beautiful finishes will not tarnish, discolor or rust. Available on PAC-CLAD wall and roof panels, coil and sheet in aluminum and steel. Consult a PAC-CLAD representative for warranty and lead times.
For more information, and for Petersen’s full product line, visit PAC-CLAD.com.
RC-FLEXair® Is Ideal for Terminal Control
The RC-FLEXair from Reliable Controls features an optional precision-airflow sensor and a brushless DC damper actuator, making it ideal for many types of terminal control applications. The pressure sensor ports are highly resilient and made from die-cast aluminum; combined with the aluminum enclosure and steel baseplate, this controller is rugged and built to last.
Learn more now at reliablecontrols.com/RCFA
California Buildings • Q3 2022
Upgrading to Mobile Access?
KastlePresence®
The Essential Upgrade
Learn More at Kastle.com
academic collaborators, municipal leaders, design teams, contractors, marketing directors, manufacturers, truck drivers, construction workers, and everyone and anyone in between. Whether it’s your part of your Scope 1,2, or 3 carbon, your ILFI Zero Carbon Certification, your ESG goals, or your corporate mission statement, we all have the responsibility and we must all act now. With the passing of the Inflation Reduction Act (IRA), we can no longer blame political inertia and look the other way.
As a sustainability engineer at Buro Happold, a Johns Hopkins University Bloomberg MPH Fellow, a USGBC-LA Board Member, and one of the founding co-instigators of Carbon Leadership Forum – Los Angeles, I aim to do everything in my power to leverage the California construction industry’s access to capital, clout, innovation and talent to reengineer the way we build, not just for profit, but for people.
We must capitalize on this to push for zero carbon buildings that tackle operational carbon, embodied carbon, environmental justice and public health. Now is the time for the construction industry and real estate sector, and maybe all of corporate America to stop setting goals and start achieving them. n
Hetrick is a sustainability engineer at Buro Happold and a USGBC–LA Board Member.
We Help You Do Business in California.. the World’s 5th Largest and Most Unique Economy
You can advertise your products and services in California Buildings News. California is an innovative leader in commercial real estate, whose owners and operators are early adopters of the latest and most sustainable products. We can help you reach decision-makers who design and operate office buildings, apartment communities, hotels, hospitals and other commercial facilities…architects, contractors, facility and property managers, engineers and others. Our magazine goes beyond single-silo product coverage and reports on all types of issues, people, products and services needed in buildings.
Our next issue...
Design & Operation of Office, Multifamily, Hospitality, Medical and Government Facilities
New Challenges Facing Building Management
Q4 2022 • $5
Special Features...
n Fire and Life Safety Solutions n More Secure Building Access n Technology for Space Management n Q&A with BOMA Vice Chair Moreno n Statewide coverage of the
California buildings industry—
the fifth largest in the world
n News about commercial buildings, multifamily complexes, hotels, hospitals, factories, institutional facilities n Regional news focus on Northern and Southern California n Ad opportunities allow you to choose either statewide or regional market pricing n More than 21,000 print and digital readers
