Panels of real estate professionals surveyed in California’s major office and investment markets believe the credit crunch in Los Angeles and San Diego is starting to ease while conditions in Orange County and San Francisco aren’t quite as optimistic.

According to the latest Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey, there was a sense that credit conditions would likely remain tight for the near term in Los Angeles and San Diego while higher financing and land costs would keep rental rates lower in Orange County and San Francisco, respectively.

"The Allen Matkins/UCLA Forecast Survey looks forward to market conditions in 2011 and asks the regional panels for their views of changes in supply and market conditions," said Jerry Nickelsburg, economist, UCLA Anderson Forecast and author of the survey results summary, in a statement. "What is interesting about this survey is that by looking beyond the near term it picks up the impact of today’s economic conditions on longer-run market conditions. In the case of San Francisco there appears to be a difference of opinion between the panel’s view and the economic fundamentals from our forecasting models. As this unfolds, some interesting investment opportunities could develop."

Los Angeles
The panel does not believe the Los Angeles market will tighten between today and 2011. The survey results imply an average vacancy rate in Los Angeles at levels lower than experienced in the last 20 years, and rental rates consistent with a stable future evolution of market fundamentals. Today’s market represents a healthy office space market and with new supply expected to come on the market over the next three years at a rate just about equal to the expected increase in demand — the market will remain healthy.

San Diego
The panel was pessimistic last December about San Diego’s office market. In the latest survey, composite index, rental rate index, and vacancy rate index are higher. The panel sees the market tightening out to 2011 with both occupancy rates and rental rates higher.


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