Look Out, The Market Is Softening

John Tipton is an operating partner at Allen Matkins.

LOS ANGELES—The California real estate market is softening. According to the Allen Matkins UCLA Anderson Forecast, which GlobeSt.com has obtained exclusively, the market is running up to its peak in the office and multifamily sectors, while the industrial market remained the star of the industry. Even in sectors and markets where investor sentiment remained positive, meaning a showing of 50% or more, the overall sentiment had ticked down compared to the same survey last year. In Los Angeles, for example, sentiment was down in every sector compared to investor sentiment in the previous forecast. The forecast provides a three-year outlook at the market.

While it shouldn’t be surprising that the industrial outlook was overwhelmingly positive, the negative multifamily outlook in four of the six markets reviewed was surprising. “The only area where I was surprised was in the multifamily market. If you look at multifamily, San Francisco, the East Bay and Silicon Valley went from being positive to negative, while San Diego went from positive to barely negative and L.A. and Orange County both remain positive but with a decrease in positivity,” John Tipton, an operating partner at Allen Matkins, tells GlobeSt.com. “That also showed up in developers’ willingness to start a new project.”