2012 Survey Results Give Developers the Confidence to Take Action - AM/UCLA Anderson Forecast

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The current survey, taken in May/June 2012, shows continued optimistic developer sentiment and the continued solid indications of incipient new commercial construction in each of the seven markets surveyed.

The highest sentiment Indexes are in San Francisco, Silicon Valley and San Diego. This is followed by Orange County, the East Bay and Los Angeles. Not surprisingly, this correlates with job growth in office-using employment over the past three years.However, the differences in sentiment are small. In both Southern California and the Bay Area 16% of the panel expressed that they would begin or had an associate who would begin one new project and 9% that they would begin more than one project in the coming 12 months.

In all of the markets surveyed, developer sentiment, though still very positive, is weaker than six months ago. This is consistent with the nervousness over Europe and the potential impact that could have on manufacturing exports. Industrial growth is being driven by California manufacturing exports, rather than by imports from Asia, as was the case several years ago.

The most encouraging news we find in the June Survey comes from the first Allen Matkins UCLA Anderson Forecast survey of multifamily housing developers. While there are no historical data to form a basis for analytical comparison, the results are quite striking. In each of the three markets surveyed, Los Angeles, San Francisco, and Silicon Valley, the panel was optimistic about the prospects for returns on multifamily housing in the coming three years. The survey indicates that the market outlook is sufficiently bright for 70% of our panel or their associates to begin new multifamily projects in the coming 12 months.