Dean Zander, CBRE’s new multifamily institutional sales expert, says that activity from institutional capital, both foreign and local, is strong in Los Angeles.
Los Angeles is fast becoming a favorite market for institutional multifamily buyers. Capital from local, domestic and foreign buyers is attracted to Southern California for both direct acquisitions and local partnerships. With many experts predicting an extended runway, Dean Zander, executive VP of CBRE capital markets and an expert on multifamily institutional sales, says that the activity is poised to grow over the next year.
“I think the activity is going to accelerate. There are institutional caliber assets and institutional caliber clients, and I think that the capital that is being attracted to Southern California, particularly to L.A. and the surrounding counties, is looking for a safe harbor. L.A. is viewed as a safe place for investment, particularly in the coastal regions. We are seeing a strong flow of capital coming into the Los Angeles market, predominately from local and Southern California-based buyers, and then from West Coast-based buyers, then we track throughout the country,” Zander tells GlobeSt.com. “Then, we are seeing enhanced interest from foreign buyers as well, weather that is Chinese, German, Canadian. The CB brand is perfectly suited to attract that capital.”
In recent years, major developments and investments from Asian investors, mostly from China and Korea, have made headlines. While there is a lot of capital from Asia, Zander says that Germany, Canada and Latin American countries are also major players in the market. “I think it has been more Asian dominated in the press,” says Zander. “That has gotten more attention, especially with some of the specific development sites in Downtown Los Angeles, but the Canadians have actually been much more active, but maybe not as news worthy because they are so local.”
This capital is chasing institutional-quality assets, but L.A. is known for its family ownership. Where there are no institutional-quality assets available, this capital is creating local partnerships. “We are absolutely seeing institutional-backed sponsors entering suburban markets with the idea of doing a deep value-add program to a B or even a C class asset,” adds Zander. “The institutions will typically find a local sponsor that has experience rolling up their sleeves and spending $25,000 to $40,000 per unit to renovate this product.”