We spoke with Blackwell about the players in the multifamily market, the OC submarkets seeing the most demand and the types of properties being sought.

GlobeSt.com: Who is buying and who is selling multifamily now?

Blackwell: Private investors looking to complete 1031 exchanges have led the way as the most active buyers and sellers in 2017. Most are looking to grow their multifamily portfolio and reposition equity in submarkets that are within their core operating areas. We have seen this shift from previous years when investors were willing to purchase out of their area to seek higher yield. Additionally, with rates on the rise, we have seen more urgency from investors to complete their exchanges and secure their financing while rates still remain low. We have also completed sales this year with owners cashing out since they feel the market is in peak pricing territory.

GlobeSt.com: What corners of the OC are seeing the strongest demand?

Blackwell: Well-located properties in markets such as Anaheim, Santa Ana, Costa Mesa, Tustin, Garden Grove, Orange and the beach cities have all seen very high levels of buyer demand. For example, we recently listed and sold properties in proximity to Downtown Anaheim and Downtown Santa Ana where we have seen a slew of new restaurants and shops opening up, which has provided more local amenities for tenants within walking distance or a quick commute. Due to the growing tenant demand, these thriving areas have experienced a high level of rent growth, which has attracted buyers to purchase multifamily properties nearby. Plus, we have seen a widening pool of buyers for coastal multifamily properties as cap rates have trended down across the county, with a mere 50-to-75-basis-point difference between North Orange County and the coast. This has pushed an increasing number of buyers to consider the coast in their acquisition parameters.

GlobeSt.com: What types of properties are being sought?

Blackwell: Properties with a value-add component have always been in high demand. Also, there has been a flight to quality for stabilized properties that have undergone some improvement. This part of the buyer pool is looking for assets with an attractive going-in yield that doesn't require much work.

GlobeSt.com: How do you see 2017 unfolding within this sector?

Blackwell: 2017 will be a very good year for the multifamily sector since fundamentals have remained very strong. However, everyone is watching interest rates and how they are going to affect the market. We have seen approximately a 50-basis-point rise in rates over the past quarter. Overall, we have seen buyers become more selective with properties they are pursuing given that most feel we are long in the cycle.

NEWPORT BEACH, CA—Private investors looking to complete 1031 exchanges have led the way as the most active buyers and sellers of multifamily properties in Orange County in 2017, and they have a specific strategy in mind, CBRE SVP Dan Blackwell tells GlobeSt.com. Blackwell recently represented the seller and the buyer of Olive Street Apartments, a 14-unit apartment complex in Anaheim, to an undisclosed private investor in Anaheim for approximately $4.19 million; the price per unit of more than $299,000 was among the highest in the area; the transaction was part of a 1031 exchange.

The building, located at 129 South Olive St. and in proximity to Downtown Anaheim and the Anaheim Packing District, features two-bedroom, two-bathroom townhome floorplans. Each unit is more than 1,000 square feet with vaulted ceilings and patios and balconies. Building amenities include a secured gated entry, 32 subterranean garage spaces and an on-site laundry facility.

According to Blackwell, the owners received multiple unsolicited offers for the apartment building and decided it was a good time to sell based on the demand and the prices they were offered.

The Orange County multifamily market had one of the lowest vacancy rates in the country at 4 percent, according to CBRE's fourth-quarter research report. Numbers for both, the last quarter and the full-year 2016, reflected robust US multifamily investment activity. Acquisitions of multifamily assets reached $45 billion in the three months of 2016, the second-highest quarterly volume since Real Capital Analytics began tracking this metric in 2001.

We spoke with Blackwell about the players in the multifamily market, the OC submarkets seeing the most demand and the types of properties being sought.

GlobeSt.com: Who is buying and who is selling multifamily now?

Blackwell: Private investors looking to complete 1031 exchanges have led the way as the most active buyers and sellers in 2017. Most are looking to grow their multifamily portfolio and reposition equity in submarkets that are within their core operating areas. We have seen this shift from previous years when investors were willing to purchase out of their area to seek higher yield. Additionally, with rates on the rise, we have seen more urgency from investors to complete their exchanges and secure their financing while rates still remain low. We have also completed sales this year with owners cashing out since they feel the market is in peak pricing territory.

GlobeSt.com: What corners of the OC are seeing the strongest demand?

Blackwell: Well-located properties in markets such as Anaheim, Santa Ana, Costa Mesa, Tustin, Garden Grove, Orange and the beach cities have all seen very high levels of buyer demand. For example, we recently listed and sold properties in proximity to Downtown Anaheim and Downtown Santa Ana where we have seen a slew of new restaurants and shops opening up, which has provided more local amenities for tenants within walking distance or a quick commute. Due to the growing tenant demand, these thriving areas have experienced a high level of rent growth, which has attracted buyers to purchase multifamily properties nearby. Plus, we have seen a widening pool of buyers for coastal multifamily properties as cap rates have trended down across the county, with a mere 50-to-75-basis-point difference between North Orange County and the coast. This has pushed an increasing number of buyers to consider the coast in their acquisition parameters.

GlobeSt.com: What types of properties are being sought?

Blackwell: Properties with a value-add component have always been in high demand. Also, there has been a flight to quality for stabilized properties that have undergone some improvement. This part of the buyer pool is looking for assets with an attractive going-in yield that doesn't require much work.

GlobeSt.com: How do you see 2017 unfolding within this sector?

Blackwell: 2017 will be a very good year for the multifamily sector since fundamentals have remained very strong. However, everyone is watching interest rates and how they are going to affect the market. We have seen approximately a 50-basis-point rise in rates over the past quarter. Overall, we have seen buyers become more selective with properties they are pursuing given that most feel we are long in the cycle.