The Winter 2024 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey, released Wednesday, shows that adaptive reuse of office properties is growing, with 21% of California real estate owners and operators planning to redevelop existing office space over the next three years for alternative purposes across multifamily, industrial and retail.
Panelists don’t expect the office sector to fully recover until the end of 2026. The findings underscore the industry’s growing lack of conviction in the sector as high interest rates, declining valuations and ongoing remote work continue to impact office buildings across the nation.
Allen Matkins partner John Tipton said, “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. While the financial aspect of adaptive reuse projects remains a key challenge in 2024, we expect to see a growing emphasis on the conversion of office buildings to uses that better support local economies in the coming years, in California and throughout the country.”
