LOS ANGELES, Dec. 6, 2011— Rising rental rates combined with declining home ownership rates are sounding a clarion call for continued investment in the multifamily sector, according to respondents of Jones Lang LaSalle/RealShare APARTMENTS Outlook 2012 Survey. The survey, completed by more than 150 private investors, real estate brokers, developers, REIT and institutional investors, was conducted in conjunction with RealShare APARTMENTS 2011 Conference, held recently in Los Angeles. While core assets in primary coastal markets remain the top draw for investment, survey respondents are also expressing a desire for value-added properties and fielding ever-increasing competition from foreign investors.
“It’s clear that multifamily is the sector to watch now, and in 2012,” said Jubeen Vaghefi, Managing Director and leader of Jones Lang LaSalle’s Multifamily Investment Sales team. “During the past year, apartments have shown a vitality that’s unparalleled among the other asset classes. This survey’s results only solidify that perspective as we watch investors chase yields in markets that previously have been under the radar.”
Los Angeles, San Francisco, Dallas, San Diego and Phoenix are the top five cities in which respondents say they are most likely to invest in the year ahead—beating out 2010’s heavyweights of New York City and Washington, D.C. On the sell side, respondents say Las Vegas, Los Angeles, Washington, D.C., Atlanta, Houston and Phoenix make up the cities in which they’re most likely to divest themselves of properties.
So who’s making up the majority of investors? Respondents say their main competition is private investors (46 percent), followed by institutional investors at just 23 percent. Coming in with barely a blip on the radar is competition from developers (4 percent) and foreign investors (3 percent). However, those foreign investors are notably muscling their way in to strategic, select markets, said David Young, Managing Director and leader of Jones Lang LaSalle’s West Coast Multifamily team. “They’re drawn to New York, Washington, D.C., San Francisco, Los Angeles, and to some extent Seattle. Foreign investors are seeking opportunities in the cities that they know—those that they see on the covers of magazines—and in many cases, they’re seeking joint venture partners to lead the way.”
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Investors from Asia lead the pack, according to respondents. Nearly half (47 percent) say Asian investors make up the majority of interest in U.S. multifamily, while the Middle East (28 percent) and Canada (26 percent) are also contenders. Still, 28 percent also say they’re not seeing any foreign investment at this point.
When asked to choose their top three investment criteria necessities, more than two thirds of respondents (67 percent) picked value-added properties as their top reason for choosing a certain property. That was followed up by more than half of respondents (52 percent) choosing a transit-oriented location, and 45 percent choosing a suburban/garden-style location.
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“Outside of cap rates and price per unit, we’re focusing on location for our acquisitions,” said Eric Freedman, Coastline Capital Partners. “Where are the people going to be, where is the demand always going to be? Even when the market goes down, or when it goes up…if you can find a place where people want to live and work—that’s what we’re targeting.” For a complete recap of the RealShare Apartments 2011 Conference, please visit
www.realshareconferences.com/apartments.
Jones Lang LaSalle Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm’s in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether a sale, financing, repositioning, advisory or recapitalization execution. In 2010 alone, Jones Lang LaSalle Capital Markets completed $43 billion in investment sale and debt and equity transactions globally. The firm’s dealmakers completed $33 billion in global investment sales and buy-side transactions, equating to nearly $140 million of investment trades completed every working day around the globe. In the United States, Jones Lang LaSalle grew its office broker volumes by 257 percent in 2010 and is quickly gaining market share across all property types. The firm’s Capital Markets team comprises approximately 800 specialists, operating in 185 major markets worldwide.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2010 global revenue of more than $2.9 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.8 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.9 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.
