Cityview Sees Opportunity in West Coast Multifamily Markets

Like all sectors of commercial real estate, multifamily executives have seen a drop off in deals.

Tony Cardoza, managing director of acquisitions at Cityview, may be an exception. In some areas of the Sunbelt and the West Coast, which is his area of focus, he is seeing a surge in transactions,

In the last six months, says Cardoza, who will be a speaker at GlobeSt’s upcoming Multifamily conference in mid-October, ”there’s been a lot more transaction volume.”

“There is some distress we’re seeing in the multifamily sector that’s driving sellers to come to market that really wasn’t evidenced in the past. I think the capital markets are much more liquid, and capital providers are really looking at some of these opportunities in a more serious manner than they were before, and want to step into transactions like that.”

Cardoza added that multifamily buyers are getting more aggressive, given that the Federal Reserve is expected to start cutting interest rates next month, and willing to make bets.

Where have deals picked up steam most? Cityview is seeing the bulk of the activity in the Bay Area, Seattle, and Denver.

“Seattle has picked up significantly as well, coming off a tough run over the last couple of years. And operationally, it’s picked up significantly in terms of occupancy and rents, absorption of product that’s coming to the market there over the last 24 months,” Cardoza said.

While he noted that Los Angeles has been mostly “flat” from an operation perspective, lately the metro area has seen more activity, according to the real estate investment firm.

Currently, Cityview has its sights set on a couple of things. One is assets priced favorably below the replacement cost, which is a “number that gives us some surety in terms of how it’s valued today, and some operational upside in the asset going forward,” said Cardoza.

The other is focusing on entitlement projects in its core markets, which are mainly on the West Coast. Cardoza estimated that the government approval period takes two years, while construction takes another 24 months – for a total of four years.

“We think there really won’t be enough supply coming to the market at that point in time. And we think there’s a good opportunity there,” he stated.

Cardoza added there isn’t much capital around for development, meaning construction will be low. But he thinks there will be plenty of opportunities for Cityview to cash in on what it sees as undervalued assets.