Q&A with J.P. Morgan’s Matt Felsot: The State of Commercial Real Estate in California

Connect Media asked Matt Felsot, West Regional Market Manager for Real Estate Banking at J.P. Morgan, to share insights on asset class activity in California in our latest CRE Q&A.

 Q: How are you and your Real Estate Banking team working with clients in California?

A: California has a vibrant economy that’s fueling the need for commercial real estate growth across office, industrial, retail and multifamily asset classes. We’ve developed long-term relationships with experienced developers, property owners and investors who have been through many cycles and are continuing to provide support to the local communities. Our Real Estate Banking team knows the local markets well and has deep industry experience, delivering customized solutions and an efficient loan process to our clients that meet their needs – whether that’s term debt, repositioning and construction loans, subscriptions facilities, revolving lines of credit, among other solutions. Our clients can also benefit from having access to a full suite of financial services. We’re able to offer real estate investors not only balance sheet solutions, but also treasury management, investment banking and private banking services, delivering one bank in a very focused way.

Q: Which asset classes are experiencing the most activity in the market?

A: The industrial space has experienced a lot of activity nationwide, driven largely by growth in the ecommerce industry that’s creating an increased need for mass distribution centers close to populations. Activity around the Southern California ports also continues to impact growth in industrial rental rates and land value. Another trend we’ve observed is that local developers are looking to redevelop office space, rather than constructing new buildings. The sharing economy is impacting the way we work. We’re seeing space per worker declining, and the need for technology and new amenities, such as gyms, coffee shops and day-care centers, and office buildings are being redeveloped to accommodate those needs.

Q: Are you seeing a shift in retail locally due to the ecommerce movement?

A: There’s been an interesting confluence between physical retail and ecommerce, causing a shift in land use locally. As ecommerce continues to evolve, we’re seeing some larger retail centers replaced with mixed use developments that incorporate experiential retail. These centers are catering to shoppers who want an experience and amenities that create a sense of community. We’re also seeing an increase in grocery-anchored retail properties that are well located in the center of towns.

 Q: How are you working with your clients to remain successful through the cycle?

A: We’re always making sure that we’re in lock-step with our clients. Whether they need traditional CRE lending solutions, treasury, or investment banking services, we’re customizing solutions that meet their specific industry needs. We have strong market coverage, and continue to expand our team with local and industry experts who have a deep knowledge base of how the different asset classes are faring through the cycle. We’ve just welcomed Alex Mast to the team as Northern California Market Manager. Due to our strong portfolio, we can act nimbly for our clients. It’s about maintaining a fortress balance sheet, and working with our clients to make strategic decisions now that help them succeed throughout any cycle.

For comments, questions or concerns, please contact Dennis Kaiser