Federal Tax Overhaul Seen to Benefit California Commercial Real Estate

Federal Tax Overhaul Seen to Benefit California Commercial Real Estate

California’s commercial real estate industry is expecting to see “moderate” growth because of the Trump administration’s overhaul of the federal tax code that took effect last year.

That’s one of the conclusions from the December survey of real estate professionals by the Allen Matkins/UCLA Anderson Forecast released Wednesday.

“The tax bill is expected to increase the rate of return on commercial real estate and makes investment more attractive,” the Anderson economists said. “Survey participants predict it will cause moderate though uneven growth.”

The survey found that the sentiment for both the San Diego and Orange County office markets has rebounded from a low in the June 2017 survey.

Demand for warehouse space remains strong, driven by the growth of e-commerce, but this trend is prompting pessimism about the retail real estate market.

“This trend continues to cause the closing of many California stores, including retailers Sears, Kmart, Walmart, Kitson and Macy’s, despite the fact that the economy continues to grow,” the economists said. “There are still opportunities out there, but retail is overbuilt in general.”

Unlike retail, the survey found that multi-family commercial real estate is performing well for investors.

The biannual survey projects the three-year outlook for California’s commercial real estate industry and forecasts potential opportunities and challenges affecting office, multi-family, retail and industrial sectors.

Article By: Times of San Diego

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