The multifamily supply on the market is growing. With the potential repeal or Costa Hawkins, retrofit requirements and rising interest rates, multifamily owners are deciding that now is the time to sell, according to Kimberly Stepp, a principal at Stepp Commercial. As a result, cap rates are ticking up in the market. To find out more about what is happening in Santa Monica's multifamily market, we sat down with Stepp for an exclusive interview. Here, she tells us why the multifamily supply on the market is growing, where cap rates are headed and how investors buying in the market at adding value.

GlobeSt.com: What are we seeing from an inventory standpoint for apartment assets in Santa Monica right now?

Kimberly Stepp: Inventory levels have been increasing as owners who may have been on the fence about holding onto their asset are choosing to sell. There are three main reasons for this occurrence. First and foremost is they are concerned about the financial uncertainty of their assets due to the threat of the Costa Hawkins Repeal, which would remove limits on cities' rent control policies. If Costa Hawkins is repealed, rent control could be placed on properties built after 1978 and vacancy decontrol might be in jeopardy. The second reason for the added inventory is the seismic retrofit requirements Los Angeles County has mandated. Owners who don't want to make the financial investment to bring their property up to code are choosing to sell now as opposed to moving forward with the very expensive retrofit requirements by the City. The third reason is because of rising interest rates, which, while an indication of an improving economy, are negatively affecting purchasing power and yields.