Affordable housing investor Kairos Investment Management Company is taking a contrarian approach to investment in 2022. As part of that strategy, the firm is targeting two unlikely, San Francisco and Las Vegas, which Jonathan Needell, president and chief investment officer of the firm says fit the company's investment profile.
"We carefully research and consider market conditions to identify areas offering great potential for investment that are often overlooked or disregarded by other investors," Needell tells GlobeSt.com. "Our contrarian approach allows us to identify niche markets where we see growth opportunities, such as supply-constrained markets, markets with below-asking rental rates, or areas where vacancy rates are low but on the road to recovery."
San Francisco and Las Vegas—two cities that aren't normally grouped together—fit that profile, says Needell. "Both of [the cities] have been negatively impacted by the pandemic," he explains.
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San Francisco has already started its recovery cycle, with both apartment and office demand beginning to return in the second half of the year. "We believe it is destined to recover soon as the city known as an innovation hub," says Needell, describing the city's recovery as a rollercoaster. "Companies continue to safely bring back employees to the office and large-scale employers continue to set up offices in the Bay Area." Needell points to the example of Facebook parent Meta signing a 1 million-square-foot lease in the market in early December.
Similarly, Las Vegas also began its recovery in the second half of the year. "Visitor numbers are up 80% compared to spring of 2020 when the pandemic hit the hardest," says Needell. "With lower costs of living and a favorable tax environment for businesses, many tech companies have relocated to the Entertainment Capital of the World, further highlighting the market's strength and growth opportunities."
Last year, KIMC acquired 209th Street, a mixed-used asset in San Francisco, and Siena Townhomes, a multifamily property in Las Vegas. "Our recent loan originations and acquisitions show how we have continuously remained ahead of the game with our investments," says Needell.
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Kelsi Maree Borland
