A recent survey conducted by the law firm Allen Matkins, and UCLA Anderson Forecast, provides a look at the current and future state of the commercial office markets of California.
Current State: "California commercial real estate remains in the doldrums...It's just a general shell game of tenants switching sub markets...to look for more stable aggressive landlords and to get the cheapest deal..."
I Agree: our recent projects haven't been new businesses moving into the area, so much as existing businesses taking advantage of low rental rates, and in general moving up to nicer space.
Forecast: The survey stated, "we find optimism returning and the distant glow of light at the end of the tunnel..."
I'm Unsure: The survey points out that while Sillicon Valley is swimming in excess office space, it is also home to a number of high growth industries that are poised to lead us out of the current recession (and fill up all of the empty Valley buildings). Regarding the East Bay and San Francisco, the lack of development leading up to the current recession means there isn't a glut of new space, but that doesn't help absorb all the existing space.
I want to believe there is light at the end of the tunnel, but I'm not seeing anything right now that supports this forecast.
Download the complete survey (HERE).
