NKF Expands SoCal Multifamily Group

Newmark Knight Frank has expanded its multifamily investment group in Southern California. Blake Okland, national head of multifamily investment sales, Kevin Shannon, co-head of U.S. capital markets, and Sean Fulp, private capital group lead will provide leadership for the group. The group will provide a multidisciplinary experience for multifamily investors.

“When Chris Benton re-joined Newmark Multifamily Capital Markets platform at the beginning of the year, we examined how we could integrate the existing talent we have under the same roof to form a more powerful service offering for our clients,” Okland tells GlobeSt.com. “Chris partnering with Anthony Muhlstein and joining forces with Sean Fulp and Kevin Shannon is a logical extension of trends already underway at Newmark in the industry as real estate product types and capital sources continue to converge.”

The structure of the group gives clients access to brokers with experience in all commercial asset classes. “Several of our clients invest across many if not all the real estate food groups,” says Okland. “Approximately 87% of real estate capital allocations in 2020 is for office, multifamily and industrial product, according to NKF Research. Being able to advise our clients across these primary disciplines allows us to be more synchronized in advising on their investment strategy and portfolio and provide best-in-class services. A client partnership comes from understanding needs and providing solutions holistically.”

While it seems like an odd time to expand this platform due to the pandemic and economic disruption, Okland says that this is a long-term, strategic change. “This type of expansion transcends the pandemic, but the current market turmoil brought on by the virus does create somewhat of a pause or reset button, and the recovery will not be the same across all product types,” he says. “While residential, life sciences and supply chain logistics are leading the recovery, the office sector will recover on a different trajectory as will retail and hospitality. With that in mind, bringing a multi-disciplinary advisory solution to the market place couldn’t be more timely.”

That doesn’t meant that brokers aren’t responding to market changes. The apartment industry has changed and slowed during the pandemic. “The multifamily sales have slowed in Southern California since the onset of the pandemic. There will be an uptick in closed deal activity in the fourth quarter, but it will not quite reach the normal, pre-COVID velocity, according to NKF Research. The unemployment rate is still close to 20% in Los Angeles, and investors are looking for post-COVID and post-stimulus rental data points. Approximately 70% of our Southern California investors are forecasting negative rent growth in the next year,” Shannon tells GlobeSt.com. “This among other underwriting adjustments is creating a bid ask gap which is keeping a significant amount of multifamily product on the sidelines.”

However, there is still movement in the market and capital for new deals. “The good news is that debt from Fannie and Freddie Mac is better than pre-COVID and the vast majority of multifamily investors plan on increasing their presence in Southern California over the next two to three years,” adds Shannon. “Ground up development is the most popular strategy over the next 12 months for Southern California multifamily investors.”