The San Fernando Valley is poised to be L.A.'s hottest multifamily investment market in the next year. According to Michael Koshet, off-market multifamily specialist at KW Commercial, there are more opportunities popping up in the market and buyers can find better yields on value-add deals. Koshet expects the market the see increasing investor demand next year as well as increasing demand from renters, who are finding betters values in the market.

“I love the San Fernando Valley as the top market in L.A.,” Koshet tells GlobeSt.com. “If you go to Co-Star and look at multifamily for sale on the market, there are a lot of dots popping up. In that square, there are rarely deals over 30 or 50 units. That is where there is going to be a lot of growth, in my opinion, in L.A.” Koshet is seeing the most activity in the square formed by Thousand Oaks to Porter Ranch to Encino. He calls it a “grid” bordered by the 119 to Topanga to the 405 to the 101.

One of the reasons for the increased activity is the $10-billion Warner Center development, a master planned community that will bring new, modern residential, office and retail space to the market. “They don't have $10 billion in a one-mile radius in other major metropolitans, like San Francisco or New York,” says Koshet. “That is going to caused a huge ripple effect to the growth of the market. At some point, the current renters are going to get priced out of the market and they are going to go to the immediate surrounding cities, like Tarzana and Canoga Park, the areas that are less expensive. At the same time, Warner Center is going to bring something really cool to the market.

The most significant driver, at least for investors, is the better yields that you find in the market. “I am seeing more bang for the buck for the renter, and I think there is more long-term growth opportunity for investors,” says Koshet. “In the Tarzana, you can get a deal for $250,000 a door for a value-add product, or $225,000 a door in Canoga Park. In Hollywood, the same deal is $350,000 a door. There is room for the valley to grow, and more buyers are taking advantage of that.”

With these new emerging markets bordering high-income markets, like Calabasas and Hidden Hills, there is also a cachet to the markets. “That shows me the kind of growth that is happening and that will happen in the market,” says Koshet.

Instant Insights /

Investors, Look at San Fernando Valley for 2018

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