California CRE Rebounding?
February 10, 2023
As we all know, the COVID-19 pandemic has significantly impacted California’s commercial real estate market. However, according to CBRE, some sectors have been affected differently. For example, the office market has seen a significant decrease in demand as more companies have implemented remote work policies, leading to a 14.5% vacancy rate in the second quarter of 2021 – the highest in over a decade.
On the other hand, the industrial and logistics market has seen a significant increase in demand as e-commerce has risen during the pandemic, leading to a 2.7% vacancy rate – the lowest in over a decade, and rental rates for industrial space have increased by 7.3% year over year.
Furthermore, the multi-family sector has also seen demand growth as more people choose to rent instead of buy due to economic uncertainty. According to Zillow, the median rent in California has increased by 3.2% year over year.
It’s important to note that California is a large and diverse state, and the commercial real estate market can vary greatly depending on the location. Some markets may be more affected than others by the pandemic. For example, the San Francisco Bay Area, with a large technology sector, may have been hit harder by the shift to remote work than other areas of the state.
While the pandemic has certainly brought its share of challenges, there are still plenty of opportunities for growth and investment in California’s commercial real estate market. If you’re interested in learning more, don’t hesitate to reach out and let’s connect!