LOS ANGELES—New construction throughout California will remainstrong through 2017, according to the latest commercialreal estate surveyconducted by UCLA Anderson and AllenMatkins, GlobeSt.com reports exclusively. The survey showsnew construction growth in the office,multifamily and industrialmarkets during this time period.

“There are three drivers of this growth. First, you havesustained employment growth, which leads people to have confidencethat there will be positive growth in the future,” JohnTipton, real estate development partner at Allen Matkins,tells GlobeSt.com “Two, you have an extended period now with lowinterest rates, which simply makes the cost of building moreaffordable. Third, and this is really related to interest rates,when developers look at rates of return on real estate relative toputting money in a bank account or bond, it is a much morecompelling story.”

The officemarket is finally beginning to pick up after theeconomic downturn. The survey shows that one half of the panel isplanning to start office construction projects in the next 12months. “You are seeing some speculative building, but not thatmuch, says Tipton. “You are really seeing it mostly in the hottestmarkets right now, which are San Francisco and the Silicon Valley.There was no speculative building at all in these office marketsuntil three years ago. “ In L.A. and Orange County, developers areexpecting vacancy rates to be low due to strong demand in 2016 and2017 as the economy continues to improve.