“The progress, such as it is, has been driven by the steady employment gains in coastal California,” the report said.
Businesses filling offices include professional, technical and scientific services firms along with healthcare companies. Industrial and warehouse space is being taken by manufacturers and export-related businesses.
The forecast is based on polls of developers and their financiers about their sentiments for the coming three years. Their responses varied by region, with markets where the tech industry is strong showing the most promise. San Francisco and Silicon Valley, tech hotbeds, ought to be the first areas where nonresidential construction is renewed, the report said.
In Southern California, some office landlords are finally beginning to see tangible evidence of a recovery taking hold, the report said, as rents and occupancy stabilize in their buildings.
“Clearly, Southern California office space markets have not recovered and the fundamentals do not by themselves support another building spree, but the free-fall of 2008 and 2009 is over and office markets are, little by little, getting better,” the report said.
Developer optimism combined with stronger job growth in San Diego and coastal areas of Los Angeles County such as Santa Monica suggest nonresidential construction will return to San Diego and parts of Los Angeles before the balance of Los Angeles County and Orange County.
Bay Area industrial property developers were most optimistic about Silicon Valley as the location for future construction. Orange County got the most support in Southern California, where three-fourths of those surveyed said they were in the process of putting together new industrial projects. (credit to, r, vincent, la times)