LOS ANGELES—Private investors are entering the institutional multifamily arena, according to Greg Harris, executive director at Institutional Property Advisors. He has seen an increase in bids from private investors and family offices on his last several large multifamily deals, including the Waterstone Apartment Homes in Chatsworth. The property traded hands between institutional investors for $72 million, but there was significant interest—and bids—from private investors as well.

“What we are seeing across a lot of our more recent large apartment marketing efforts is that we have been seeing a cross section of both institutional and private client investors looking at the deal,” Harris tells GlobeSt.com. “That has especially been consistent across nearly everything that we have sold over the past 12 months in the $70 million to $100 million price range.”

Private investors don't often compete with institutions because of their capital limitations, but Harris says the low interest rate environment is allowing private investors to get into high quality product with less capital down. “Interest rates are so low that it has given people the ability to leverage in with lower down payments. So, they are trading some assets to acquire larger assets,” he says.

Private investors are also trading up to get into institutional product. They are selling quality assets in their portfolios and trying to trade into higher quality product. “We have been seeing a deep well of large private families that own multifamily properties in L.A. County and the surrounding metro trade out of some assets and into higher-grade assets to upgrade their portfolio,” adds Harris. “It has created a perfect storm.”