Brody: Most buyers are private investors with some working in partnerships with syndicators to pool money in order to compete with other all cash offers. Buyers pushing up prices are paying all cash, many securing financing after the close, and are long-term holders with no plans to sell.

GlobeSt.com: Where are you seeing the most interest and activity in Los Angeles?

Brody: We are seeing activity across Los Angeles, from Santa Monica to West Hollywood, east to Silverlake and Downtown. Many areas that were not acceptable to many investors 10 years ago are now attractive including Highland Park, Boyle Heights, South and East Los Angeles and East Hollywood.

GlobeSt.com: What is happening with pricing and cap rates, and where are they headed?

Brody: Pricing is at all-time highs and cap rates seem to be at all-time lows. Many investors are buying rent-controlled buildings in the sub 3% cap range, with plans and valuations based on vacating all or most of the building, renovating the units and re-renting at market rents, which often times are at rates 2-3x what they were pre-renovation.

GlobeSt.com: How does market activity this year compare with last year, which was record-breaking in terms of transactions?

Brody: Market activity is down due to a low supply of properties for sale. Sales volume as of Q2 2017 was down over 22% compared to 2016. In terms of record-breaking transactions, we saw an apartment property in Venice trade at a .7% cap rate! According to Costar, that is the lowest cap rate to ever record for a multi-family property nationwide.

GlobeSt.com: Has the recent development legislation affected activity or investment interest in the L.A. market?

Brody: Legislation has definitely impacted the ease of development, especially in Santa Monica and West Hollywood where regulations are the stiffest in terms of development. The City of Los Angeles is also now requiring over 13,000 apartment buildings to be retrofitted for earthquakes due to the “soft-story” construction of buildings built in the 1950s-1970s. The cost of the retrofitting is and will cause a strain on owners who may have large amounts of equity but not necessarily the cash on hand to pay for the required construction to bring these buildings up to code. This may, over time, lead owners to either sell or refinance to pull cash out to pay for the required retrofitting.

GlobeSt.com: What is you outlook for the L.A. market for the next 12 to 18 months?

Brody: Over the next 12-18 months the market will more or less stay the same. This is due to the historically low inventory we are seeing, leading prices to stay high and cap rates low, as demand for properties continues to outstrip supply. Rent growth will continue to slow, but in markets like Los Angeles, it will stay stable as more renters continue to come to market.