January 8, 2016
The Inland Empire apartment market continues to attract investors from “near and far”, according to Marcus & Millichap’s fourth quarter 2015 report. The strong interest in the Riverside-San Bernardino metro area is being driven by a quest for higher yields than are available in the “home” markets of some Los Angeles and Orange County investors.
Marcus & Millichap notes that buyer interest exceeded available listings, which pushed values higher last year. Institutions seeking stabilized Class A assets are more likely to find them in the Inland Empire’s western submarkets of Ontario, Chino Hills, Corona and Rancho Cucamonga, or farther east in Palm Desert. Cap rates for these assets range in the sub-5 to the mid-5 percent range.
Additionally, private buyers from the East Coast and overseas have contributed to an intense and competitive bidding market. That’s pushing many Southern California investors into value-add plays, both to the west and in San Bernardino, where first-year yields can range near 6 percent.