June 13, 2019
By Dennis Kaiser
Connect Apartments is coming up next week in Los Angeles. The conference features a host of commercial real estate experts who will cover a wide range of topics ranging from housing affordability, the economy, as well as trends impacting investment, development and finance of apartment assets.
Leading up to the event, Connect Media asked Avanath Capital Management’s Nicholas Dunlap to share his thoughts about the multifamily market. Check out our latest 3 CRE Q&A to find out what is driving the apartment market today, considerations investors must weigh and ways tenant demand is driving decisions.
Q: What are some of the overarching trends you see driving the apartment market as the year progresses?
A: With low rates and near peak (for cycle) values, there is continued focus on operational efficiency and technology to help drive the bottom line. Additionally, the multifamily industry continues to face the hostile threat of anti-business/housing legislation in Sacramento, and investors are navigating through stormy waters as things continue to develop. With AB-1482 now in the Senate and ballot initiatives for Prop 13, and Statewide Rent Control potentially on the ballot in 2020, a lot hinges on how things play out over the next 18 months.
Q: How can and should multifamily managers approach their decisions today, given the length of the cycle, interest rates and overall economic conditions?
A: I would be overstating the obvious to talk about how strong the current market fundamentals are with regard to record low unemployment, low interest rates and consistent same-store rent growth YOY, but I do believe we will see another decrease in rates and that only makes multifamily assets more appealing for investors. Long-term, whether you are asking me today, 10 or 20 years ago, I remain positive on multifamily in and around Orange and Los Angeles counties, especially for the long-term hold.
Q: What are some ways tenant demand is driving decisions about portfolio operations i.e. amenities, technology, renovations, etc.?
A: There is much to be said about the amenities arms race, and we see this with both our affordable and conventional communities. There is big demand for smart-technology and we have begun phasing in an array of upgrades and appliances such as: USB outlets, door locks, Amazon Key/Package Lockers and have begun looking into the opportunities that exist with Alexa. But with all of this emphasis on technology, some of our biggest successes are through the launch of Activate, which is our Health and Wellness Program that we are piloting at select Senior communities. Through strategic partnerships with an array of non-profits, our residents have access to basic medical services, financial literacy tools, professional services, social events and programming. We are very excited about our efforts in both areas, and expect to continue in 2019 and beyond.
For comments, questions or concerns, please contact Dennis Kaiser