Data centers and digital infrastructure now lead the charge for industrial development, outpacing e-commerce as the primary driver of new industrial projects, according to the Winter 2025 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey. In the latest survey, 38% of respondents cite data centers and digital infrastructure as the foremost catalyst for development, compared to 17% in the previous survey.

Accordingly, outlook on the industrial sector is strong, particularly in Northern California, where half of survey respondents expect multiple new projects within the next 12 months. Southern California mirrors this optimism, with 54% anticipating a surge in new projects.

The Forecast also cites shifts in the office market driven by AI and digital infrastructure. The growing demand for AI talent has spurred office leasing, leading to the first drop in office vacancies in San Francisco since 2019. AI job growth in the region has increased by 59% since January 2024.

“The growing adoption of cloud computing, machine learning, and artificial intelligence is influencing commercial real estate,” said Spencer Kallick, partner at Allen Matkins. “As technology continues to shape the sector, real estate developers and investors are taking a close look at which markets are positioned for growth across the office, industrial, retail, and multifamily sectors.”

Register Today to “Be in the Room” when Michael Brennan receives Connect CRE’s Lifetime Achievement Award and will participate in the Keynote Interview with Kevin Brennan, also of Brennan Investment Group. Join us at Connect Industrial Midwest 2025 on the afternoon of Wednesday, March 5, at Joe’s Live in Rosemont, IL, for this exclusive presentation!