UCLA Allen Matkins Survey: California Developers Grow Increasingly Selective

California’s commercial real estate market is stabilizing as developers adapt to a prolonged higher-rate environment, according to the Summer 2026 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey released Wednesday. Although financing costs, construction expenses and broader economic uncertainty continue to constrain new development, respondents remain optimistic about the long-term outlook for needs-based sectors.

The Summer 2026 survey highlights improving market fundamentals across much of California,. But rather than signaling a broad market rebound, respondents describe an increasingly selective investment environment where projects must meet higher underwriting standards before moving forward.

Interest rate expectations have led to a shift in outlook. Sixty-one percent of respondents in the Winter 2026 survey said anticipated rate cuts made them more optimistic about development, but now 64% say the interest rate environment has made them more cautious about pursuing new projects.

“California’s commercial real estate market hasn’t stopped moving, but it has become much more selective,” said Spencer B. Kallick, partner at Allen Matkins. “With developers now assuming that higher rates are here to stay, it’s fundamentally changing how projects are evaluated. Those who remain disciplined about where they deploy capital, focusing on sectors with durable demand and underwriting conservatively, will be best positioned to capitalize on the next phase of the market.”