Allen Matkins/UCLA Survey Predicts Rising CRE Distress

A majority of California’s commercial real estate industry participants (71%) anticipate distress levels to rise in the coming months, with 53% predicting that new development will decrease over the next three years, according to the Summer 2024 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey. With interest rates remain the primary concern for the industry, these findings signal ongoing challenges for stakeholders across the commercial real estate spectrum, as well as emerging opportunities. 

Allen Matkins partner John Tipton said, “Consumer behavior is changing, and that will transform how traditional real estate is used. We are working closely with our clients to recalibrate their development and investment strategies, embracing adaptive reuse, digital integration and sustainable practices to create the infrastructure of our future economy.”

The Allen Matkins/UCLA Anderson Forecast is a bi-annual survey that polls a panel of California’s real estate professionals to project a three-year ahead outlook for commercial real estate and the macroeconomic trends impacting industry participants across the multifamily, office, retail and industrial markets.

In the multifamily segment, optimism is improving compared to the previous survey, with 65% of Northern California respondents and 57% of Southern California respondents expecting demand to grow faster than supply in the coming years. Similarly, respondents expect office vacancies to improve, even though there’s virtually no new development.