Source: Association of Realtors

In the World of commercial real estate office space sees a longer recovery, multifamily is still in high demand and retail continues to rebound. The most recent Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey, released earlier this year, shows a mixed bag of outlooks that vary based on the type of real estate offered. The findings come as the commercial real estate industry continues to navigate rising interest rates, declining valuations, and economic uncertainty, leading to a contraction in new commercial development across most asset classes. However, there are several signs of light at the end of the tunnel.

The biannual survey polls a panel of California’s real estate professionals to project a three-year ahead outlook for commercial real estate and the macroeconomic trends impacting industry participants across the multifamily, office, retail, and industrial markets. The latest survey finds that 29% of Southern California panelists and 20% of Northern California panelists are planning new office developments this year, compared to 48% and 50% in 2022, respectively, when demand was expected to grow alongside supply. However, those expectations did not materialize according to the latest survey, as 2022’s high interest rate environment impacted office market fundamentals.

While industrial remains a strong performer in the commercial real estate industry, the latest survey predicts that demand will remain strong but not increase at the elevated rates of the past two years. We will continue to actively solicit brokers for trust deeds secured by industrial properties as we expect good appreciation in this segment through the long-term horizon.

Retail remains steadfast on the comeback trail. Following a period of headwinds caused by the pandemic and consumer reliance on e-commerce the signs of recovery in the retail market come down to three key factors that are creating optimism for the sector:

• New housing developments are driving demand for nearby retail options
• Return to the office, albeit limited, and a growth in tourism leading to retail demand in metropolitan areas
• The reconfiguration of existing retail establishments adapting to open-air, post-COVID concepts, is attracting new shoppers/customers

Demand of the Fund’s trust deed product offering continues to be extremely strong these past few months big banks & smaller regional banks still have their vaults doors shut to all but prime small-business owners. The lack of traditional financing for them is driving a ton of application flow. Borrowers who are landlords are still snatching up available multi-family properties as soon as they come on the market. With rental rates for housing staying elevated and expected to continue slowly climbing we don’t see this trend ending anytime soon. We do see our existing borrowers struggling to secure new financing. This has led to an uptick in delinquencies and notice of foreclosures being sent out. Thanks to this we expect returns in the fund to also increase as incremental revenue from default interest goes up. We may also get the opportunity to foreclose on a few properties which usually provides tremendous returns & dramatically increases the Fund’s share value.

Thank you for all our existing partners who have been referring over friends & family to join us. Please note that our initial minimum investment is $100,000; however existing partners in the Fund can add on in any amount of $2,500 or more.