LOS ANGELES-If multifamily housing here was a weather report, the forecast would be partly sunny. That's the assessment of a new team at CBRE brought on to take care of institutional clients in sales of large apartment properties in the western U.S.
Curtis Palmer leads a team of seven that's based in the CBRE office in Beverly Hills. They all join from Multi Housing Capital Advisors, a multifamily investment group founded by Palmer. Since 2009, MHCA sold, financed and equitized $2 billion in apartments.
Palmer tells GlobeSt.com that the L.A. multifamily market is “beginning to look up,” but things are “just getting back to where we were pre-recession.” The good news is that there is fierce competition for multifamily units coming on the market, thus driving prices higher.
REITs, life insurance companies and pension buyers are causing what Palmer calls “a feeding frenzy” for available properties. But there's been tepid interest outside of that core group, Palmer says, other than when there's a value-add to the targeted property. In that case, equity funds and private investors jump in.
The situation is in stark contract to the multifamily market in the San Francisco Bay area and Seattle, where rent growth has been “off the charts,” Palmer says. The Bay area is “the best market in the U.S.,” with strong job growth and a lot of available properties driving things.
“Southern California has not had that (type) of recovery,” says Palmer, but adds that the recovery from the so-called Great Recession has been a lot faster than he would have anticipated, given the depths to which things plunged. “If you would have come to me in 2009, never in a million years would I have believed we could have a recovery this quickly,” he says.
CBRE senior team member Ted Fentin tells GlobeSt.com that the current low interest rates will continue to propel the L.A. market in the second half of this year. “We're very optimistic and feel, going forward, beginning in the second half of this year, there's going to be a lot more product in the market,” he tells GlobeSt.com.
Fentin tabbed merchants and pension fund advisors as stimulating the second half market, as values come back and sunset periods on funds create a “need to harvest” the value from investments, he says.
As reported earlier in GlobeSt.com, CBRE also released a recent analysis of Asian hotel growth.
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