Twenty-one percent of California real estate owners and operators say they will redevelop office space during the next three years, a study has found.
That work will be done in several categories, including multifamily, industrial and retail, according to the Winter 2024 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey.
The study, released Feb. 7, found “a growing lack of conviction” in the region’s office sector, which continues to be hurt by high interest rates, drops in value and too many people continuing to work out of their homes.
“With a significant portion of the office market continuing to underperform, there is increased focus on the conversion of older and obsolete product into more productive uses such as housing or mixed-use facilities,” said John Tipton, a partner with Allen Matkins in a statement. “We expect to see a growing emphasis on the conversion of office buildings to uses that better support local economies.”
Southern California’s office sector won’t recover until the end of 2026, with new office construction to stay down in the meantime, according to the study.