As Bay Area Prices Soar, SoCal Takes Advantage
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UCLA Anderson Forecast's senior economist Jerry Nickelsburg says SoCal has been slower to rise from the depths of the recession, but the region is just starting to hit its stride. He says San Diego is the "star performer," with its growth in tech and biotech. In comparison to the last forecast from May 2014, SoCal developers are more bullish than in previous years. According to the most recent Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey released last week, 47% of panelists stated that they began projects in the last 12 months.
Allen Matkins partner Tony Natsis (snapped with John Kilroy at our LA State of the Market event last month) uses a baseball game as an analogy for SoCal. He says the region is in much earlier innings of the game, where it may not even be time to develop in all of them. He says NorCal has mostly surpassed the phase where buying assets that weren't well leased or needed renovations were the main play. Up north, it's time to develop.
And larger players are looking at the market for better deals. Raintree Partners' CEO Jeff Allen says his firm has turned its focus from NorCal to SoCal because there is "more runway left for growth," as compared to the Bay. He says that over the next two to three years, he sees better investment opportunities in SoCal. Raintree just made a move in the market, picking up five apartment buildings in LA County totaling 327 unit, including the 174-unit Pico Lanai Apartments in SaMo (above).