Dive Brief:
- More than a third of California developers have delayed or canceled commercial real estate projects due to rising costs and tariff uncertainty, according to a summer 2025 Allen Matkins and UCLA report.
- Industrial and multifamily projects posted the strongest outlooks, though office and retail face uneven growth and tighter financing conditions, according to the report.
- The pauses show developers are focusing on projects with the strongest demand as costs and economic pressures reshape the commercial real estate market in California.
Dive Insight:
Rising construction costs are weighing on California’s commercial real estate market, with office and parts of the retail sector still struggling to gain momentum.
Office sentiment remains subdued in much of Southern California. Only 16% of developers in the region plan new projects, according to the report. Meanwhile, in Northern California, about 17% of developers are planning new projects.
“After a prolonged period of uncertainty, the office market sentiment is starting to turn a corner, albeit slowly,” said Julie Hoffman, partner at Allen Matkins, a Los Angeles-based law firm. “Broad-based recovery is still a few years out.”…