Middle Market Digest: This Week in Southwest

Employment announcements ruled this week, with several companies announcing promotions and new hires. Savills Studley promoted several professionals to the role of vice chairman in its Downtown and West Los Angeles offices, and Westcore Properties hired Robert Sistek as chief operating officer. Deal activity remained strong, and is expected to continue to be strong through the end of the year, making up for the slow start to the year. Phoenix multifamily transactions continued to be robust, along with major acquisitions in Los Angeles and San Diego. Somewhat surprisingly, new reports have pegged the Inland Empire as the leading multifamily market in terms of occupancy in Southern California, and with limited construction, vacancy rates are expected to stay low in the market. Read on for more information about these deals and the trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.

BY THE NUMBERS

INLAND EMPIRE, CA—The Inland Empire now has the lowest apartment vacancy rate in Southern California. Job creation in the Inland Empire will remain strong despite a tightening labor market. Riverside and San Bernardino County employers are slated to create nearly 30,000 positions as the unemployment rate edges down toward 5%. Gains in retail, government and education-related positions bode well for apartment owners as workers in these sectors historically rent. Yet, continued income growth is making homeownership more realistic for some house- holds, namely in San Bernardino County where the median home price hovers around $270,000 per unit. While a recent increase in metro home sales should be noted, this trend’s impact on multifamily vacancy will most likely be limited as pent-up household formations should backfill any recently vacated apartments. The construction pipeline will fuel the tight vacancy rate. Market-rate completions will be sparse this year with projects only coming online in Riverside, Rialto and Temecula. While an increase in conventional deliveries will occur in 2018, more than 1,000 rentals will be spread between three projects in Ontario/Chino, including the 400-unit Paseos at Ontario I. The lack of new conventional apartments throughout the metro should allow demand to rebound following a shortened span of rising vacancy.