In LA, multifamily investment sales hit record level: report

But profit margins have tightened and rent growth is slowing

TRD LOS ANGELES /
Jul.July 26, 2018 10:00 AM
(Credit: Max Pixel, Pixabay, Wikimedia Commons)

In the last year, there has been more multifamily investment activity than in any period in Los Angeles history.

There were $10 billion in apartment building sales from June 2017 to June 2018, with average sale price for a unit hitting a record $275,000, according to a report by CoStar. Increased sales prices are also pushing cap rates lower.

Sales figures at mid-year 2017 were on pace to fall behind 2015’s record-setting levels of over $9 billion, but the fourth quarter more than made up for it with $3 billion in sales, making it one of the strongest quarters in history.

Meanwhile, rent growth is slowing.

L.A. has posted higher than average rents over the last few years, but that has since slowed to the national average of 3 percent, which CoStar pins to a lack of affordability amid higher vacancy rates.

But an influx of luxury units this year is expected to push rents higher. Marcus & Millichap expects rents to rise by 6.3 percent this year to an average of $2,200 per month.

Builders say they are facing pressure from other angles as well, and singled out Measure JJJ. The ballot measure put into effect last year requires builders to incorporate affordable housing into some projects and requires them to pay prevailing wages on projects seeking city incentives, which both contribute to higher construction costs. [CoStar] — Dennis Lynch 


Related Articles

arrow_forward_ios
From left: Howard Schwimmer and Michael S. Frankel, with 1601 W. Mission Boulevard and 2757 E. Del Amo Boulevard (Credit: Google Maps)

Rexford Industrial adds to LA portfolio with $100M in acquisitions

Andrew McDonald and At Mateo in the Arts District

Cushman’s West Coast chief talks expansion, DTLA market, the death of the starving baby broker & more

3339 Exposition Blvd. and Asher Luzzatto

Luzzatto Co. assembling creative office hub in West Adams

Jason Illoulian and the Cemex plant

Faring makes $30M assemblage play on WeHo/LA border

From left: Nuveen CEO Vijay Advani, Graymark founder/CEO Brian Hecktman

Graymark, Nuveen pay $97M for El Segundo creative office

La Mirada industrial building

Clarion pays $77M for La Mirada industrial project

510 Park Avenue and CEO of Monster Beverage Rodney Sacks

Monster Beverage affiliate guzzles down industrial project in San Fernando

Carlyle Group co-CEO Kewsong Lee, Holland Partner Group CEO Clyde Holland, and the Sofia Los Angeles (credit: North American Sekisui House, LLC)

Carlyle Group pays $273M for big apartment complex in Westlake

arrow_forward_ios
Loading...