Frothy MF Climate Prompts Downturn Debate

SAN FRANCISCO–With a frothy market in place, multifamily developers, investors and brokers are watching carefully for signs of a downturn. This condition is due to sustained job growth, bringing about some of the highest rental rates in the country. And, the abundance of technology workers with healthy salaries continue to demand top-tier multifamily assets in key locations such as the Bay Area.

For now, developers are bringing new, high-end properties to market while simultaneously repositioning Class C assets, performing condo conversions and creating microunits to meet this demand. Investors are bullish on San Francisco, undeterred by all-cash bids and high prices with among the lowest cap rates in the nation. During a multifamily property panel at RealShare Bay Area this week, key experts assessed the state of this hot property type and weighed in on whether such bold expectations are truly warranted and how long they will last. The panel consisted of Yat-Pang Au, founder/CEO of Veritas Investments; Laurie Morfin, SVP; Bellwether Enterprise; Lydia Tan, SVP, Bentall Kennedy; Clinton Textor, vice president of investments, Marcus & Millichap and moderator James Kilpatrick, president NAI Northern California.