Major Commercial Real Estate Executives Very Upbeat On 2022 and Beyond

Yesterday I attended a commercial real estate major investor and developer panel put on by my Northern California SIOR chapter at San Francisco’s Ferry Building  Overall everyone was very optimistic about 2022 and 2023. Paul Single with City National Bank told us our economy was unbelievably strong and interest rates were already up 175 basis points since December 2021.  Drew Gordon, with Hudson Pacific Properties, whose firm owns the Ferry Building, said technology is driving increased headcount and company growth. Class A office buildings with bells & whistles, new health and safety features, will far outperform Class B and C buildings, some of which will not do well in the future. The Bay Area has some of the top universities in the world, and this will continue to draw major innovation, creativity and capital to our region.  Comments were made by various members of the panel that construction materials and labor costs over the past 18 months have gone up 1% per month, and some items like steel roofing might require an 18-month lead time which further exacerbates construction. Industrial land in parts of the East Bay have hit $100 a square foot, which just a few years ago would have been unthinkable, but e-commerce has fueled the need for great amounts of warehouse space. Also, companies worried about the supply chain are taking extra space as a safety measure. A new term, IOS, stands for Industrial Outdoor Storage, and it is getting harder and harder to find yard space for company truck fleets and commercial vehicles . There was also mention that worldwide, the United States is still seen as one of the most stable, safe and best places in the world to have major investments and there are billions of dollars from overseas seeking to place money here.