Multifamily Investors Bullish on Four Western Cities

LOS ANGELES-GlobeSt.com has learned exclusively that multifamily investors are making an aggressive push westward into Seattle, Phoenix, Los Angeles and San Diego, according to Jones Lang LaSalle’s third-quarter 2012 West Coast Multifamily Outlook. As a result of the positive momentum from the falling unemployment rates and increase in rental and occupancy fundamentals, these target cities witnessed a total combined multifamily transaction volume of $4.6 billion as of September.

Seattle remains high on the list of target cities for multifamily investment. According to David Young, managing director of Jones Lang LaSalle in Seattle, “Over the next three years, we expect the apartment sector in Seattle to outperform much of the US, keeping Puget Sound front and center on investors’ radar. The Seattle area will have slow but steady growth in the coming year, as increases in gas prices and lower cost of living keep migration focused around the urban core.”

Seattle’s transaction volume year-to-date is up to $1.03 billion. Private-equity buyers have fueled more than half of the transactions, accounting for 57% of the investor composition, followed by institutional capital at 23%. In the past year, the Seattle metro has added 13,800 jobs.

Phoenix ranks third in the nation in terms of total dollar volume of sales, and year-to-date is up nearly 55% over 2011 at $1.65 billion. In the past year, the Phoenix metro has added 33,000 jobs. According to John Cunningham, EVP of JLL in Phoenix, cap rates have fallen an average of 30 basis points here since 2011. Private investors have dominated the 2012 acquisition landscape and should continue to play an integral role in 2013. Rental demand has been strong, and vacancy has plummeted from its peak in 2009. New deliveries have begun to enter the market, yet absorption is strong while overall rental rate continues to increase.