{"id":31880,"date":"2025-08-17T19:56:42","date_gmt":"2025-08-18T02:56:42","guid":{"rendered":"https:\/\/essential.construction\/news\/california-developers-hit-pause-on-projects-due-to-high-costs\/"},"modified":"2025-08-17T19:56:42","modified_gmt":"2025-08-18T02:56:42","slug":"california-developers-hit-pause-on-projects-due-to-high-costs","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/california-developers-hit-pause-on-projects-due-to-high-costs\/","title":{"rendered":"California developers hit pause on projects due to high costs"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<div class=\"text-to-speech\">\n    <button class=\"text-to-speech__button button\"><br \/>\n        <img decoding=\"async\" class=\"text-to-speech__button__icon\" src=\"https:\/\/www.constructiondive.com\/static\/img\/play.svg?500116090725\" alt=\"-\"><br \/>\n        Listen to the article<br \/>\n        <span class=\"text-to-speech__button__audio-length\">3 min<\/span><br \/>\n    <\/button><\/p>\n<div class=\"text-to-speech__controls\">\n        <audio controls=\"\" class=\"js-text-to-speech\" preload=\"none\"><source src=\"https:\/\/res.cloudinary.com\/dmgi9movl\/video\/upload\/q_1\/v1755183125\/news\/text_to_speech\/california-developers-pause-projects-tariffs_u6vsbs.wav\" type=\"audio\/mp3\"><\/source><\/audio><\/p>\n<div class=\"text-to-speech__controls__text\">\n            This audio is auto-generated. Please let us know if you have <a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/contact\/\" target=\"_blank\">feedback<\/a>.\n        <\/div>\n<\/p><\/div>\n<\/div>\n<h3>Dive Brief:<\/h3>\n<ul>\n<li><span><span><span><span><span><span>More than a third of California developers have <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.businesswire.com\/news\/home\/20250806806633\/en\/Allen-MatkinsUCLA-Anderson-California-CRE-Forecast-Reveals-Tariff-Uncertainty-and-Rising-Costs-are-Stalling-Over-a-Third-of-California-CRE-Projects\" target=\"_blank\"><span><span><span><span><span><span><span>delayed or canceled commercial real estate projects<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> due to rising costs and tariff uncertainty, according to a summer 2025 Allen Matkins and UCLA report.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n<li><span><span><span><span><span><span>Industrial and multifamily projects posted the <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/data-center-warehouse-construction-planning-high\/757242\/\" target=\"_blank\"><span><span><span><span><span><span><span>strongest outlooks<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span>, though office and retail face uneven growth and tighter financing conditions, according to the report.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n<li><span><span><span><span><span><span>The pauses show developers are focusing on projects with the strongest demand as <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/construction-july-2025-economic-roundup\/756779\/\" target=\"_blank\"><span><span><span><span><span><span><span>costs and economic pressures<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> reshape the commercial real estate market in California.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n<\/ul>\n<h3>Dive Insight:<\/h3>\n<p><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/construction-costs-june-2025-tariff\/753255\/\" target=\"_blank\"><span><span><span><span><span><span><span>Rising construction costs<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> are weighing on California\u2019s commercial real estate market, with office and parts of the retail sector still struggling to gain momentum.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>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.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cAfter a prolonged period of uncertainty, the office market sentiment is starting to turn a corner, albeit slowly,\u201d said Julie Hoffman, partner at Allen Matkins, a Los Angeles-based law firm. \u201cBroad-based recovery is still a few years out.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Retail growth is uneven as well.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The survey forecasts Los Angeles rental rate growth to lag inflation and big box development to fall out of favor. Meanwhile, about 38% of respondents expect a new retail growth cycle within three years, though much of it will be confined to mixed-use and speciality projects rather than broad expansion, according to the report.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The opposite, however, is playing out in industrial and multifamily development.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Industrial demand is still outpacing supply in both Northern and Southern California, led by ecommerce. Developers are even considering office-to-industrial conversions. Vacancy rates are projected to remain steady or decline, according to the report.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Multifamily sentiment is also the most optimistic it has been in years, with 66% of respondents planning new projects, according to the report. That\u2019s the highest share since 2022.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cDemand continues to outpace supply across the state, especially for highly amenitized rental product that offers work from home space,\u201d said Heather Riley, partner at Allen Matkins. \u201cDespite rising costs, our clients are actively looking to build at a rate we have not seen in years.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The survey collected responses from 60 firms in Northern California and 80 firms in Southern California. Out of these firms, 46% of respondents identified themselves as value investors, and most of the remaining identified as developers.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n<p>[ad_2]<br \/>\n<br \/><a href=\"https:\/\/www.constructiondive.com\/news\/california-developers-pause-projects-tariffs\/757625\/\" rel=\"nofollow noopener\" target=\"_blank\">This article was originally posted at Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] Listen to the article 3 min This audio is auto-generated. Please let us know if you have feedback. Dive &#8230; <a title=\"California developers hit pause on projects due to high costs\" class=\"read-more\" href=\"https:\/\/essential.construction\/news\/california-developers-hit-pause-on-projects-due-to-high-costs\/\" aria-label=\"Read more about California developers hit pause on projects due to high costs\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[457],"tags":[],"class_list":["post-31880","post","type-post","status-publish","format-standard","hentry","category-construction-dive","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/31880","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/comments?post=31880"}],"version-history":[{"count":0,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/31880\/revisions"}],"wp:attachment":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/media?parent=31880"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/categories?post=31880"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/tags?post=31880"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}