Survey Sees Signs of Optimism in Office and Industrial Markets | San Diego Business Journal

By Lou Hirsh

Monday, February 14, 2011

Researchers are reporting signs of real, quantifiable optimism — at least for the coming three years — about California’s office and industrial real estate markets, including the San Diego County scene.

The market is not on the cusp of a pre-recessionlike boom in building or buying. But the frequently-cited UCLA Anderson Forecast, which periodically surveys commercial real estate investors around the state, says rising optimism is evidence of a turning point in commercial markets by 2013.

“After 18 months of pessimism about office and industrial markets, we have now seen six months of optimism,” said Senior Economist Jerry Nickelsburg, in a Feb. 3 statement by the economic forecasting arm of UCLA’s Anderson School of Management.

The investor survey was initiated in 2006 by the Los Angeles-based law firm Allen Matkins Leck Gamble Mallory & Natsis LLP, which has offices in San Diego and Del Mar Heights. The firm continues to conduct the survey, covering seven California regions, with UCLA researchers, polling respondents on whether the investment climate is improving or weakening.

Based on its latest survey taken in November and December, researchers said investor optimism in Los Angeles and San Diego counties is at its highest level since June 2007, indicating confidence regarding rental and occupancy rates. This suggests, researchers concluded, “that something closer to 12 percent rather than 20 percent vacancy rates is in the not too distant future.”

Anderson forecasters have also projected that by the middle of 2011, demand for office space in those two counties should begin to turn around as employment rises, and excess space currently on the market should be absorbed through 2012.

Commercial brokerage firms have also recently published local data for 2010, pointing to gradually declining vacancy rates in the office and industrial sectors as new construction remains at a near standstill.

Some locally based property investment firms have already ramped up acquisitions based in part on a sense of improving market conditions. For instance, San Diego-based Westcore Properties, which owns industrial and office buildings, recently announced that its global acquisition volume quadrupled in 2010 — hitting $284.5 million, up from $71.2 million in 2009. Five of 10 completed deals in the past year were in California.

“We continue to seek new value-add opportunities that we can position for strong future upside and that fill a niche in each market,” said President and Chief Executive Officer Don Ankeny. “There is tremendous opportunity in the market today.”

via sdbj.com

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