RESOCAL SURVEY
Multifamily
Still Tops
Asset Classes
Although survey respondents agree that
tighter lending will have the most impact on
the market in 2009, the sector still stands a
good chance of being the first to recover.
It’s no surprise that most participants in the Southern California market
say the number one factor that will impact multifamily in 2009 is the tight
lending market. That’s how 64% of respondents to a recent survey conducted by Real Estate Southern California see it.
“The lack of credit is bringing the transaction market to a standstill,” stated
one property manager. “As a consequence, values are falling, cap rates are rising and further destruction of value ensues. It’s a downward spiral.”
The good news is that the multifamily sector stands a good chance of
being the first to recover when the economy finally turns around, according
to industry leaders at the National Multi Housing Council’s annual meeting
earlier this quarter. But the big question is: when will that recovery begin?
The bottom line is, “Nobody knows,” comments senior vice president and
chief economist David Berson of Walnut Creek,
By Natalie Dolce
CA-based PMI Group Inc.
However, despite the declining economy, apartment performance topped all commercial real es-
tate sectors in 2008, according to a Marcus & Millichap Real Estate Investment
Services forecast for 2009. Still, job losses “dim the prospects for 2009,” the
forecast states. The company predicts that approximately 80,000 apartments
are slated for completion in 2009, down from 93,000 units in 2008, and that
new supply will fall to its lowest level since the mid-1990s as construction financing remains relatively expensive and difficult to obtain.
“Demand for apartments is directly related to the creation of jobs,”
explains Thomas Shelton, president of Western National Property Management, who is based in the Irvine office. “So until job growth returns
to a normal level, we should expect to see continued softness in the multifamily sector.”
Shelton’s firm expects to increase the number of units in its portfolio
in the next 12 months, primarily through the growth in third-party management assignments. “Our firm does not anticipate consummating any
