Marcus & Millichap's "2010 National Apartment Report" presents a snapshot of the Los Angeles multifamily market: 1. Los Angeles employment is forecast to improve in 2010. 2. New rental inventory remains slim. 3. Rents are down, but cap rates are up. 4. The city rises two spots to rank #13 of 41 national markets. 5. Purchase activity increases in Q4 2009. 6. Financing by Fannie and Freddie favors apartment over other commercial sectors.   More...

Investors are willing to accept a wide variety of returns in Santa Monica, Venice, West LA, and Palms-Mar Vista. In Santa Monica, close to the beach, Gross Rent Multipliers (GRMs) are in the range of 14.0 - 14.5. Close to the freeways, or areas further north, east or south in Santa Monica, GRMs are in the 10.0 - 12.0 range. Some of the largest sales were the best-located buildings that offered the lowest GRMs.   More...

Foreclosures and short sales drove the Hollywood income property market during the 4th Quarter of 2009. It is difficult to evaluate this market in terms of traditional metrics since nearly all properties sold are value-added opportunities.  1811 Wilcox Avenue, a vacant 12-unit building (8 singles, 4 two-bedrooms) closed at $1,475,000. This fixer in central Hollywood shows that investors often see more value in vacant buildings rather than ones occupied but saddled with below-market rents. More...

 

90 percent of owners and operators surveyed plan to boost their multifamily investment in 2010 compared to the 68 percent of respondents who had such plans in 2009. "A tremendous amount of capital waiting for well-priced, quality assets to be offered for sale has been accumulated, and many investors have begun to move off of the sidelines," reports Marcus & Millichap.  More...

 

Downtown Los Angeles is among the most affordable and dynamic neighborhoods in the city. However, what was conceived and built in the exuberant mid-2000s is now being sold in a 2010 downmarket. Developer equity has evaporated, bank loans are underwater, and some of these projects and their owners are facing Chapter 7 and Chapter 11 bankruptcy.  Read about 8 Downtown projects in bankruptcy...  In the best of times, developers and investors project mighty cash flows and dramatic increases in the value of their assets. When times don't prove so flush, they run for cover -- and in the process may lose a building or two. Read about 5 more projects in distress in Downtown LA...

The fear of market collapse has retreated, but with record job losses and businesses in triage mode, returns for commercial properties have hit the skids.  Many sellers are stuck with huge, outsized loans which require unrealistic, outsized asking prices. Buyers find it all but impossible to obtain loans. The market has been in a deep freeze for well over a year, with sales volume off 80 - 90% from 2007.  More...

To measure the steep decline in SoCal office values, we need only look to 3 Macarthur Place, a 1991 office complex in Santa Ana. This 11-story building, purchased by Tishman Speyer at the peak of the real estate market in 2007 for $83 million, just sold for $31 million, an astonishing 63% drop in value in two years. The building is 78% leased. We are bearish on the Los Angeles office market for the following reasons: More...

 

More California hotels are being pushed into foreclosure as tourists and businesses scale back their travel plans and owners are unable to pay their mortgages. Statewide, more than 300 hotels were in foreclosure or default on their loans as of Sept. 30, 2009 -- a nearly fivefold increase since the start of 2009.  The list of troubled properties includes the St. Regis Monarch Beach in Dana Point, the downtown Los Angeles Marriott, the Sheraton Universal and the W hotel in San Diego. More...