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Overall improvement in the private-sector job market and the tenuous single-family housing market will continue to prop up the southern California apartment sector through the year. Increased hiring in the professional and business services sector has supported stronger household formation growth. Gen Y will begin to move out of the nest as they become comfortable with the economic environment and feel secure with their job. This will contribute to household formation especially in the professional areas of Orange County, San Diego and Los Angeles. In Los Angeles, the number of households expanded 1.3 percent this last year, marking one of the highest rates since the late nineties. With single-family home prices on a steady decline since the fourth quarter of 2010, most of the new households will reside in multifamily properties. The growing trend to watch are the Baby Boomers beginning to shift toward retirement living from single family homes. This may bode well for some multi-family properties, but the majority of the growth will come in the senior living sector.

 

Low interest rates and strong buyer interest will motivate apartment owners to list assets in 2012, especially those who missed the strong run-up during the 2003-2007 period. This trend has already taken hold and there is a surge of 1031 exchange transactions occurring. Beach communities, as well as prime neighborhoods along the 405 and 5 corridors can offer investors returns anywhere in the high-4 to low-5 percent range. Value-add plays in more tertiary markets of the Inland Empire, north Orange County, portions of Los Angeles, and along the inland 78 corridor of San Diego and East County yield in the high-6 to low-7 percent area, depending on deferred maintenance. The hardest hit areas of the Inland Empire still maintain yields in the mid 7 to 9 percent range, due to the lingering unemployment rate and the single family housing inventory.

 

Operators will still find it difficult in some of the tertiary markets to fill units and raise rents above the rents of repositioned homes and the shadow inventory that still exists especially in portions of Inland Empire, Los Angeles county and north Orange County. Meanwhile, individuals who work in Los Angeles or Orange County are flocking to areas such as Corona, Ontario, Fontana, Chino and Corona in order to cut commutes but maintain affordable rents. The Riverside-San Bernardino market will continue to see increased activity as value-add investors and prudent buyers continue to snap up REO and distressed properties.

 

In San Diego the apartment market’s supply and demand ratio is leaning heavily toward the demand side of the equation, which is allowing owners to reduce concessions and raise rents. Effective rents will reach an all-time high in 2012 and the vacancy rate is still compressing toward 4-5% for well positioned properties in attractive markets and higher cap rates in the mid 6 to mid 7 percent range in East County and inland. These areas will attract new construction, so the risk is offset by higher yields. All in all, the investor pool exceeds the supply of for-sale properties, creating a competitive buying environment. More properties may come to market as investors see this as a good time to attract high prices for their properties.

 

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East West Commercial Real Estate is pleased to announce that Ryan Misaresh, LEED AP represented LD Entertainment in the lease of Class A office at Mani Brothers’ 9000 Sunset building in West Hollywood. LD leased 6,878 square feet, in a four year deal, which represents nearly a full floor of the building. After undergoing a recent full remodel, 9000 Sunset is positioned as one of the premier entertainment office buildings in the “Entertainment Capital of the World.”  Possessing a strong understanding of LD Entertainment’s needs and dynamic business model was essential in finding the proper fit for this rapidly growing production and distribution company, whose recent releases include the blockbuster action film “The Grey” with Liam Neeson, as well as “Biutiful,” “I Love You Philip Morris,” and “The Collector.”

This top rate space with sweeping 270 degree views of the Los Angeles basin was a match made in heaven between LD’s rise to prominence which now warrants  a top rate office environment, and a landlord in a position to provide it, with minimal TI’s, in the heart of the creative capitol of the world.

Built in 1963 and featuring 144,802 square feet, 9000 Sunset is owned and managed by Mani Brothers and was represented by Greg Camacho of Camacho Commercial.

Ryan Misaresh is a Los Angeles commercial real estate broker specializing in lease and investment transactions for retail, shopping centers, multi-family and mixed use properties.  Mr. Misaresh is part of the firm East West Commercial Real Estate, a commercial real estate services company with offices throughout California including,  Los Angeles, San Francisco, San Diego, San Jose, Orange County, San Jose, Sacramento, Oakland, and Walnut Creek. East West Commercial Real Estate provides brokerage and asset management services for retail, shopping centers, office, industrial, apartments, medical office, self storage, senior housing, and hospitality. For more information, contact Ryan Misaresh at 213-309-3279 or Ryan.Misaresh@EastWestCommercial.com or http://www.eastwestcommercial.com/

 

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Los Angeles County apartment market will gain traction as rehiring efforts boost rental household formation and completions. Los Angeles Apartment Sales will pick up.

Cap rates were pushed down for Class A and well-located Class B product to 6-percent range. Cap rates for assets with some level of distress and located in perimeter areas will average above 7 percent in the early part of 2011.

2011 Market Outlook

· 2011 NAI Rank: 11, Up 2 Places. Los Angeles into the top 10 apartment market.

· Employment Forecast: 1.5% gain.

· Vacancy Forecast: 4.4 % this year.

· Rent Forecast: Rents will advance 2.7%.

For investment sales information with commercial real estate in Los Angeles, San Diego, Orange County, Riverside, San Bernardino — Apartments for Sale, investment property, commercial REO’s, commercial bpo’s, commercial bov’s, and commercial broker price opinions, please contact Michael Duhs, Managing Director of East West Commercial at www.EastWestCommercial.com or (949) 939-8352.

As Reported by Marcus & Millichap in the 2011 Annual Report.

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