Southern California cap rates are among the lowest in thecountry. According to a new report from CBREanalyzing cap rates, the greater Los Angeles market and OrangeCounty both ranked among the top 10 tier one markets for lowest caprates in the US. Year-over-year, cap rates compressed across assetclass types, but multifamily, which has already experiencedsubstantial cap rate compression, pricing increased only 10%, thelowest of all asset classes in the two markets. Still, cap ratesare continuing to trend down, a good sign of investment perspectivein the greater Los Angeles area.

"There is an almost insatiable demand for apartment propertiesand a relative lack of new product is continuing to drivemultifamily cap rates down," Dean Zander, EVP atCBRE, tells GlobeSt.com. "The continued abundance and influx ofcapital has been one of the primary drivers in suppressing caprates in Orange County and Greater Los Angeles. Additionally, debtpricing is still very attractive to investors. Other than certainpockets in the urban CORE, we are not seeing a lot of newconstruction in the pipeline in either markets, which makes theexisting stock of product even more enticing to investors. Steadyrent growth, helped by the continued increase in jobs and migrationto both Los Angeles and Orange County has also been playing asignificant factor in keeping cap rates low. Lastly, single-familyhomes are very expensive in these markets, which in turn begets asignificant amount of the population to remain renters."