If You're Building Multifamily, Do It Now
Everyone seems to be high on multifamily. At our San Diego Multifamily Summit last week, an all-star panel told us why the market is hot. (Videos courtesy of Allen Matkins.)
OliverMcMillan SVP/principal Jim Reynolds says cities have finally figured out that infilling and bringing people back into the city is wise. In the County's smaller burgs, city council or mayors will gladly provide help with incentives, rezoning, and upzoning. Jim expects the Downtown inventory will get absorbed thanks to San Diego's high rent-to-own ratio, though he cautions that those looking a year and a half out to start building may run into some risks--namely, rents not rising as fast as previously and construction costs that seem to be reeling out of control. So "build it now or forever hold your peace." Video.
MG Properties prez Mark Gleiberman says the company has been a net seller in San Diego over the past few years, with a current portfolio here of about 1,500 units. Rising values have made it a more challenging market in which to buy, though in recent years MG has managed to win properties in San Marcos and Oceanside. What keeps Mark up at night? The concern that the rent increases of the last few years may be topping out. "Can the typical family that lives in our apartments afford to go any higher on the rents?" he asks. Or will they be forced to double up? Video.
Mike Rovner Construction VP Sterling Lund says a couple clients are spending tremendous sums to build Vegas-style amenities--"as big as they can go"-- creating a bump in quality of life for the resident who works from home. (Can we have a slot machine in the kitchen?) He also discussed the development constraints that folks faced in the past few years, and how that's now gushing out into the market. On the pre-development and pre-construction side, he's watching the impact on developers of early cost estimates that were made last cycle, and the realities they're experiencing as they try to get projects out of the ground. Video.
Our event drew 160 to the Hilton San Diego Bayfront to hear the industry leaders discuss the latest tends.
Our moderator, Allen Matkins partner Martin Togni, notes that multifamily's pretty rosy right now, from BOSA in the ballpark to Pardee in Santee. Driving the market are Gen Y's desire to be close to work and willingness to use public transit, and he sees the live/work/play trend in work the firm's clients (such as Kilroy) are doing.