West Coast Apartment Market Remained Active Through the Pandemic

While the buzz throughout the apartment industry is focused on secondary cities and the suburbs, investment activity in core coastal markets remained active through the pandemic. Essex Property Trust VP of reinvestment and redevelopment Angela M. Kralovec says that the firm continued to focus on West Coast markets, both during and post-pandemic. Kralovec is sitting down to discuss apartment opportunities, strategy and investing at the GlobeSt.com Apartments conference on October 26 and 27. We sat down with her early to get a sneak peak at the conversation.

“Essex is focused on high quality markets along the West Coast where investment demand remains very strong. Even during the depths of the pandemic, there was an active transaction market for high-quality apartment assets,” Kralovec tells GlobeSt.com. “Now that a rent recovery is clearly underway, we are seeing even more investor interest in our markets.”

Over the next year, the firm plans to target value-add deals in core West Coast markets, assuming that the cost of capital will remain low. “As a public company, there are always opportunities for Essex to add value as we can arbitrage our cost of capital against market investment opportunities. Over the next twelve months, if our cost of capital continues to improve, like it has over the past year, we would look to acquire more properties in our core West Coast markets and we will continue to invest in preferred investments backed by high quality developments,” says Kralovec.

While the firm’s core strategy didn’t change during the pandemic, it did pivot to respond to new needs, like touchless surfaces. A long-time reliance on technology helped the firm quickly make these moves. “ESS has been a leader in property technology investment for many years and thus we were able to adapt quickly to the significant increase in demand for paperless and touchless processes brought on by the pandemic,” adds Kralovec. “Our investment strategy is largely unchanged as we continue to focus on markets with great job growth prospects and limited competitive supply.”

Technology is a key point for the firm, and Kralovec plans to expand during her GloebSt.com Apartments discussion about how these initiatives are driving investments. Real Estate Technology Ventures is one vehicle the firm is leveraging. “As a founder of RETV, we continue to uncover potential investments within our space,” says Kralovec. “The beauty of the RETV platform is that it allows us to actively co-develop and obtain early access to cutting edge solutions.  Our early involvement enhances the product with real time operational feedback. SmartRent is an example. The smart-home technology company successfully created a product line that is now being used by many of the largest multifamily landlords and recently went public via SPAC.”