WS Communities - Real Estate Investment Fundamentals Continue to Bloom in Los Angeles

WS Communities - Real Estate Investment Fundamentals Continue to Bloom in Los Angeles

Sunday, 20 May 2018 07:20 PM

Topic: 

Product Announcements

LOS ANGELES, CA / ACCESSWIRE / May 20, 2018 / The supply of available single-family homes in the Los Angeles area is relatively low, about 2 months versus what MLS calls a balanced supply of 6 months. This situation is not new and not changing soon. This keeps prices high and out of reach of most residents, which creates an opportunity for developers in the lifestyle rental space. Lifestyle renters in Los Angeles are mid to high-end earners choosing to live in the moment and rent the unit of their dreams rather than do without as they save to buy the home of their dreams.

Real Estate Investment Fundamentals Continue to Bloom in Los Angeles

WS Communities, Sunday, May 20, 2018, Press release picture
WS Communities, Sunday, May 20, 2018, Press release picture

The multifamily development allows investors to maximize the capture of these higher dollars per square foot rental rates per square foot of land. As investors focus on these high-end projects, with more than 12,000 units coming online this year alone, workforce apartment development lags. This keeps demand relatively higher, and occupancy nears saturation. As demand here outpaces supply, prices rise, rents rise, and ROI improves. Investor focus on lifestyle renters creates a complementary demand for workforce living units. While both sectors (Lifestyle and Workforce) have great upside potential, the workforce has a lower requirement for continuous redesign and amenity development to attract trend conscious high-end occupants.

The population is expected to increase by 25% or more in the next 2 decades. This being driven by job growth. Growth is highest in services, in the information, professional and business sectors, as well as in service industries that support the population doing those jobs, such as health and education. The ongoing population growth in the Los Angeles Metropolitan Statistical Area (MSA) continues to drive office space and multifamily construction. Even during the supply surge over the last two years, construction in the multifamily space has barely kept up with demand, with occupancy remaining above 96%, with office space coming online in 2017 reaching a post-recession high of 2.3 million square feet.

Not unexpectedly, investor attraction remains healthy as rents outpace the rate of inflation, expecting in 2018 a 4.7% rent hike versus price inflation generally in the 4% range in the Los Angeles area as measured in the Consumer Price Index by the US Bureau of Labor Statistics (BLS) (1). Competition for good investment options among real estate projects keeps acquisition yields in check, but as the ROI outpaces other low-risk long-term opportunities, office and multifamily development remain as solid choices.

WS COMMUNITIES

WS Communities is a real estate development firm that specializes in the acquisition, entitlement, and development of multifamily and mixed-use properties in Southern California. WS Communities' projects include luxury and affordable residential units with ground floor retail and office spaces located in Santa Monica and Los Angeles, California.

EXPERTISE

SOURCE: WS Communities