5 Bay Area Players Making Multifamily Housing A Bull Market
Five Bay Area companies have made the NMHC’s annual list of the top players in the country driving the multifamily boom. NMHC chief economist and SVP Mark Obrinsky says rent growths are at historic highs and demand continues to outpace supply, which should keep the market healthy for years to come.
The key trend Mark is seeing nationwide is management firms are getting bigger, with 2014 seeing record levels of transactions and investment. He says another piece of good news is the historically low vacancy rate and an increasing interest in renting, particularly among people who live alone and recent US immigrants.
The local player that ranks highest on the group's largest apartment owners breakdown was Palo Alto-based Essex Property Trust, which bolstered up its portfolio from 33k units to over 56k in the last year. That growth vaulted the firm from No. 36 to No. 15 on the list this year—the biggest jump on the list. Thank its purchase of BRE, which brought in 23,060 units. Essex Property Trust EVP John Eudy, who's speaking at our Silicon Valley State of the Market event on April 15, says this year the cost of capital is the lowest he's ever seen. On the 50 largest apartment managers list, Essex skyrocketed up from No. 41 to No. 16.
FPA Multifamily also rounded out the largest owners list, debuting at No. 49 this year with 22k units (it had 20k last year). Earlier this year, FPA paid $63M for the 552-unit Pinnacle South Mountain at 5151 E Guadalupe Rd in Phoenix (above), an area that sees some of the highest multifamily demand in the Valley.
John Stewart Co rose a few slots on the top apartment managers list, from No. 43 to No. 38 this year. It manages about 32k units, which is roughly unchanged from last year. Here's one of its local properties: Alexis Apartments at 390 Clementina.
And the 25 largest apartment developers had showings from two Bay Area companies: Carmel Partners, which started 2,510 units in 2014 (here's its Village in Mountain View), ranked No. 11; and San Mateo-based Prometheus Real Estate Group was No. 21, with 1,500 units started. There were no local firms on the 25 largest GCs list.