LOS ANGELES—There have been many highs and lows in the market for multifamily properties over the past 16 years of my career as a broker. The team I lead, which specializes in Santa Monica and prime Westside markets, has witnessed a record-setting year in 2014 with several positive milestones. As we enter the fourth quarter, the highlights for multifamily properties larger than five units in the Santa Monica and Westside markets are as follows:

• Transaction volume is on par with the total sales seen in 2013.
• The dollar volume of these trades has surpassed 2013 significantly and is at the highest level seen in over a decade.
• Capitalization rates have reached new record lows in 2014. The year-to-date average is 3.67%; 39 basis points lower than late 2013. Surprising as it may seem, Capitalization Rates averaged 6.78% in 2001.
• Average Gross Rent Multipliers (GRM) this year are 17.3x, up from 15.7x in 2013.
• The average price-per-square-foot thus far in 2014 is $406, up from $376 in 2013.
• The price-per-unit metrics are at $388,600, up from $292,800 in 2013. 

All of this is good news, however, the real estate boom is being cautiously welcomed. Veteran and new agents alike have an acute awareness of what happened in 2007 when the real estate bubble burst.  The question now on everyone's lips is: “Are prices sustainable at these levels, and if so, for how long?”

Santa Monica is traditionally a development-adverse community, but something exciting this way comes … the Exposition Transit Corridor! The Expo line from Culver City to Santa Monica is now 70% complete. Platforms have been poured for the 17^th Street and Downtown Santa Monica stations, but these will take longer to complete due to the influx of patrons that are expected to utilize the stations. Early estimates are that the stations will open by the end of 2015 or by early 2016. The soon-to-arrive rail line has influenced new residential and mixed-use development in the city.

Returning to the question about the sustainability of the large numbers seen in the Santa Monica/Prime Westside multifamily sector, one of our team members, Aynsley Armbrust observed that Santa Monica and Westside buyers have always been location-driven. “With the exception of a few institutional players, these owners are primarily local investors. The Federal Reserve currently has many buyers and sellers in a holding pattern as we wait for more official dates for a hike in interest rates.  Buyers are eager to purchase at current rates, but some sellers are hesitant and are still holding out for that next potential bump in prices they believe is yet to come. Prudent owners, however, understand that this is truly a sellers' market and that the wave will be cresting over the next 18 months.”

Santa Monica has a highly educated populace, according to Movoto.com. It also hosts the highest rents in Los Angeles, has miles of gorgeous coastline, and an influx of new development due to the Expo Line. The bottom line for 2015 is that Santa Monica will continue to be a major power player in the multifamily real estate marketplace that continues to show promise for appreciation and sustained strength well into the future.

Charles Dunn Co.'s Team Stepp, led by Kimberly Roberts Stepp, specializes exclusively in multifamily property sales within Santa Monica and the prime Westside markets. The views expressed in this column are the author's own.