Multifamily Spotlight: Outlook for Apartment Investment and Development

At the recent EisnerAmper Real Estate Private Equity Summit West, residential real estate was front and center as a concern in the competitive San Francisco market. The panel entitled “Multifamily Spotlight: Outlook for Apartment Investment and Development,” moderated by EisnerAmper partner Lisa Knee,  talked about the challenges of developing multifamily apartment projects. Speakers included Jeff Brown, director of real assets for BlackRock; Peter Casey, director at Interstate Equities Corporation; Tom Hoban, CEO and co-founder of the Coast Group of Companies; and John Protopappas, president and CEO of Madison Park Financial.

Panelists offered their perspectives on the factors playing into pricing on the West Coast, including the rising cost of labor on the operational side as well as competition coming from new properties in the East Bay/Oakland. Hoban talked about the oversupply he is seeing in downtown Seattle, where rents are quickly outpacing incomes.

The group also offered some encouraging takes on the opportunities they are seeing right now. Mr. Casey mentioned how B and C class assets in A and B markets have come to the fore as an option for deals. He shared an example of a large complex with 120+ multi-bedroom units in Arizona, where the bank held the property after a foreclosure, so it was just sitting there waiting for a deal to happen. Mr. Casey stressed that the key to making deals like these work is modernizing and “amenitizing” the properties.

Mr. Hoban identified property management as a commodity, so a key to solving property management problems has been bringing in technology partners. Creating and expanding a “virtual place” for property management can give you the edge. He cited a project where this solution helped drop unoccupancy levels from 5% to 2.5%.

Mr. Protopappas talked about the power of amenities in modernizing the living experience for tenants,   including adding services to existing markets, such as improving storage or creating solutions for receiving packages. Mr. Brown chimed in with amenities he has seen coming online with regard to pet living solutions in multifamily communities that also set properties apart.

The panel ended with a reminder from Mr. Protopappas that, in the Bay Area, “If you build it, it will get occupied.” Wise words indeed from a summit taking place in the heart of San Francisco’s intense real estate market!