LA Multifamily Performed Well In Q1
Multifamily is strong in Los Angeles County, with new supply helping to meet demand for multifamily during Q1, according to NAI Capital’s Multifamily Market Outlook.
There have been rising rents this year with low vacancy rates, and the market fundamentals are strong, according to the report. Many people who live in LA cannot afford to buy a single-family home, helping keep the rental market active.
The average asking rental rate was around $1,778/unit in Q1, up 4% over last year, according to the report. The vacancy rate of 3.3% was unchanged over the quarter and up 10 basis points over last year.
During Q1, 14,065 units sold, up 19% over last year, and sale prices averaged $233,061/unit, up 9.8% over last year.
The report also shows the cap rates fell 26 basis points over the year to 4.4%, and 1,120 new units were delivered in Q1, up 81.2% over the first quarter of 2016.
The surge in new units over last year was because many projects at the beginning of last year remained under construction. In the second quarter of 2016, more than 3,400 units were delivered, which represented, on a quarter-over-quarter basis, a 460% increase in deliveries for newly constructed multifamily units in LA County, according to NAI Capital Vice President of Research and Marketing J.C. Casillas.
“Sellers are capitalizing on historically high prices due to low interest rates, high rents and strong demand from local investors, 1031 exchange buyers, institutions and foreign capital," NAI Capital Multifamily Services Group Executive Vice President Tim Steuernol said. "We live in an area where affordable housing options are very limited. It creates a wealth of opportunity for apartment owners to capitalize on a massive renter pool with the ability to pay rents at levels often higher than a traditional mortgage."
Multifamily experts said the trend for units is getting smaller with a big demand right now for studios and small one-bedroom units. That is particularly true in Long Beach, where Bisnow held a recent event.
Those units are at the price point the majority of renters in Long Beach seem to be looking for, Ensemble principal Tyson Sayles said.
"Long Beach offers a fantastic quality of life at an expensive but relatively reasonable price point compared to other coastal downtowns, even compared to downtown Los Angeles or even in some parts of Orange County," Sayles said.
His company puts a lot of focus on amenities and common space in its properties.
Two-bedroom units were not as in demand until The Current, a new property in downtown Long Beach, came along, according to Sayles. The high quality it offers, along with The Edison Apartments, has been received well by the local market.
The Current, at 707 East Ocean Blvd., offers studios, one- and two-bedroom units and penthouses, a 24-hour fitness club and an on-site pet spa, among other amenities.
Most properties in Long Beach with units available offer the added bonus of free parking, according to Raintree Partners Vice President of Development Rick Price.
