Industry Leaders from the multi-housing world gathered at the Pacific Club in Newport Beach on September 12th for the inaugural ULI Orange County/Inland Empire Multi-Housing Initiative Council Program to discuss the current state of the market and where the opportunities in development and acquisition will be going forward. Panelists included individuals from both public and private firms that represented perspectives from multi-housing management, acquisition, and development.
The program started with a Keynote Panel consisting of Michael Shall, President and CEO of Essex Property Trust, and Robert Hart, President and CEO of TruAmerica Multifamily, and moderated by Joe Thornton of HFF. Following the Keynote Panel, the Program Panel, consisting of Brad Cribbons of Alliance Residential, Kevin Kaberna of Greystar, David Otte of TIAA-CREF, and Tom Warren of The Holland Partner Group continued the discussion.
While the difficulties of buying and developing in the current environment where discussed, the optimism with which the panelists viewed the market was evident. With the competition that currently exists in the multi-housing market and an expected rise in interest rates, the importance of innovation, efficiency, and realistic underwriting assumptions was underscored. Michael Shall stated that rising interest rates will force multi-family buyers to put a lot more pressure on rent growth assumptions. As CAP rates rise with the expected increase in interest rates, the ability of owners to raise rents in accordance with their projections will be imperative to the success of projects acquired in the current environment.
Owners and developers will also be under increased pressure to be innovative and efficient in their operation, renovation, and design. Design components like USB charging outlets, electric car charging stations, enlarged bicycle rooms in urban areas, and significant and luxurious community space have become increasingly important to owners seeking to maximize rents. Additionally, careful understanding and consideration of expenses can provide opportunities to pass through appropriate expenses to tenants that may have previously been born by the owner. The multi-housing market in Southern California is strong. While risks certainly exist, the smartest players in the market are watching keenly, evaluating risk, and marking informed and strategic decisions with an outlook of continued growth and stability.
In addition to providing market insights, the program also provided an excellent opportunity for attendees to expand their networks and reconnect with old friends and associates. Many in attendance indicated that the value of the networking that occurred was just as significant as the insight that was gained. By all accounts the program was a resounding success, and in the coming years it will surely be established as the marquee multi-housing program in Southern California.