August 2, 2017
Early Bird Alert: Connect Apartments is planned for September 28th in Los Angeles. Here’s where to get more information and register.
Industry leaders met last Thursday, July 27th at Connect Orange County, one of the most thought-provoking SoCal CRE events. The informative afternoon featured a variety of panel discussions, which focused on some of the region’s hottest topics.
The event’s second panel, “Multifamily Leaders Talk Orange County and Beyond,” was led by Gary Goodman of Passco Companies. “It’s been just a thrilling ride for the past 15 years to be in multifamily,” Goodman said at the start of the discussion. “We’re all blessed to be in the best product type, because multifamily is the one that’s had the most success over the years.”
As the conversation progressed, panelists agreed that affordability was one of the most prominent issues affecting the current business climate. The industry is “facing a crisis to some extent” said Goodman, because the only way developers can make new deals “pencil” is by targeting the higher-end markets.
Another panelist, Jerome A. Fink of The Bascom Group, LLC, noted that this approach to the multifamily market becomes problematic in today’s market. “We are seeing softness across the country, especially in the Class A buildings.” Class B and C markets, on the other hand, are performing strong across the market. “As much as we hear stories about a giant shortage of units,” Fink continued, “the shortage is actually in the class C buildings. It’s not the class A buildings… because that’s a much smaller section of the market.”
Another major challenge affecting the multifamily market in Orange County, panelists agreed, was “winning the bid.” Laura A. Khouri of Western National Property Management, noted that this was especially true because the multifamily market has seen a stabilization of growth since 2010. As a result, brokers are being especially meticulous.
“Today every broker is verifying that you have the money in the bank,” noted Fink. “It’s not necessarily enough to say that ‘I’ve got it’ or ‘I have qualified buildings.’ They want to see your bank account… so in Orange County and LA… maybe 70% of the time now somebody is throwing down hard money to separate themselves from the pack.”
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