Why Oxnard Is Popping Up on the Radar

Oxnard has been getting a lot of attention lately. A retail sale recently broke the cap rate record and the multifamily development is starting to pop up. Now, lenders are taking an interest. A recent construction loan in the market won an 80% loan-to-cost, and other lenders, from small banks to specialized debt funds, are beginning to show interest as well.

“Developers want to develop, and lenders want to lend,” Max Mellman, VP with Quantum Capital Partners, tells GlobeSt.com. “When the supply of urban infill locations dwindle, developers and lenders pivot with the state of the market and expand their scope of investment strategies to include suburban markets.”

The recent interest in the Oxnard market is an effect of the limited availability of infill available land and the high multifamily rental rates. “Lenders are always interested in financing class-A projects of all shapes and sizes in the core markets in Los Angeles such as Downtown and the Westside; however, with the difficult and lengthy entitlement process in Los Angeles along with the high price of land, it is often difficult and expensive to build within the city limits,” says Mellman. “For those multifamily projects that do get built, developers need to price units out of the reach of most renters if the project is to pencil.”

Mellman says that the spike in interest is a direct result of the development challenges in these other—typically popular but also built out—urban-infill markets. “Both developers and lenders recognize difficulty to develop in infill markets, and as a result, we are seeing more multifamily development in first ring submarkets around Los Angeles such as Oxnard and other Ventura County cities, to meet the demand for working class families who are being priced out of LA's core markets such as Koreatown, the Westside and the South Bay,” he says.

In addition to space and demand, Oxnard and the surrounding Ventura County markets have other strong characteristics that are attractive to both developers and lenders. “These submarkets are typically distinguished by great schools, tight multifamily supply, and rising single-family home prices,” adds Mellman. “They also must have in place a transportation infrastructure that allows residents a relatively easy commute to jobs in the region.”