Multifamily Developers Take Action in LA and Bay Area - 2012 Allen Matkins/UCLA Anderson Forecast

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The most encouraging news we find in the June Survey comes from the first Allen Matkins UCLA Anderson Forecast survey of multifamily housing developers. While there are no historical data to form a basis for analytical comparison, the results are quite striking. In each of the three markets surveyed, Los Angeles, San Francisco, and Silicon Valley, the panel was optimistic about the prospects for returns on multifamily housing in the coming three years. The survey indicates that the market outlook is sufficiently bright for 70% of our panel or their associates to begin new multifamily projects in the coming 12 months.

The booming San Francisco market, for example, has seen rents increase at double-digit rates and vacancies fall to under 4%. This has given rise to a number of new building projects including the massive Park Merced, Treasure Island and Hunter's Point developments. Similarly there are a number of new developments around Silicon Valley expected to begin in the coming year. Los Angeles, with the most optimistic panel, has seen similar movement in new housing including Playa Vista II, a restart of downtown multifamily construction, and new developments in Hollywood, Santa Monica and along the recently opened Expo- Line rail from downtown to Culver City. While average rental rates for the County have not risen at the same rate as San Francisco, vacancies in specific markets are now under 2% and rental rates have been pushed up sufficiently to induce a rebirth of the apartment construction market.