California developers bullish on 2014 as new projects surge

Developers feeling jittery about the region's commercial real estate market: You're in the minority.

The latest Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey shows optimism throughout the state and across product types.

It's the first time since 2007 that the closely watched forecast has found a positive outlook across all markets. The survey compiles the outlook of developers three years out, providing better insight into development that's not yet "on the radar," according to the report. (You can download a copy of it here.)

The forecast found Silicon Valley office-developer sentiment hovering around 73 percent, far above the level of 50 percent that is considered to represent an optimistic landscape. Just over 50 percent of the Bay Area panelists said their companies would be starting one or more new projects in the next year.

Bay Area industrial-developer sentiment declined a smidge to about 60 percent, but "the bottom line for industrial space in California is one of strongly positive developer sentiment," the report notes.

Driving demand here: "The ability for these e-commerce people to make delivery of their products overnight, so you've got to be close," said Tony Natsis, a partner at Allen Matkins, in a forecast responseposted on YouTube. "If you're going to have next-day delivery to somewhere in the western region, then you've got to be in the western region."

In June, 67 percent of a Bay Area panel of industrial developers said they expected to begin new projects in the next year — and that number declined to 25 percent in the recent survey. But the forecast attributes the slump to the fact that some projects are now, in fact, starting.

On the multifamily side, San Francisco led the way in positive developer sentiment, but Los Angeles and Silicon Valley were also strongly positive.

That's "a reflection both of the strength of demand and a sense that even with building permits increasing at a rapid clip, there will not be enough multi-family housing in late 2016 to stem the rise in rental and occupancy rates," the report notes.