Could the market for new office space be slowing?

The real estate market in Southern California is enjoying healthy growth. That much is obvious given the number of cranes that are seen on a given day and how many more companies are vying for new and upgraded spaces. We noted in our last post how toy maker Hasbro will be moving into a new building that will accommodate its new and growing workforce.

With such optimism about the commercial real estate market, the question must be posed: when will it end? For real estate investors, this is a critical question since the most common way to make money in real estate is to buy low and to sell high. If you have the misfortune of buying high in a hot market, it is less likely that your investment will appreciate.

This is why the latest commercial real estate forecast from the UCLA Anderson School of Management is important. The forecast is a collection of views from real estate developers with respect to the market for the next three years, which is also essential given the amount of time it takes for a commercial project to be built.

According to the latest survey, it appears that the commercial office market is topping out. This follows sentiments that rental rate growth and vacancy rates have already hit their apex. Because of this, developers and investors alike must be particularly careful with new projects, and the guidance of an experienced real estate attorney can guard against potential losses.

The preceding is not legal advice.

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