Institutional investors are interested in increasing the amount of California multifamily product in their portfolios—with good reason. While the market has bottomed and occupancy is strong, due to a delayed recovery, California has not yet experienced the same run-up in rents that other major MSAs have experienced. Therefore, the opportunity for investors to take advantage of the major uptick in rents in California still exists.

In addition, while some construction has begun, a majority of that work is in the planning phase. This means that there won't be any meaningful new supply for two to three years. With high occupancy in existing product, rents increasing and no new development on the near-term horizon, this is an excellent time for institutional investors to acquire in California with the right local partner. Interestingly, though, after the last several years of a tough financial climate, we've seen many local multifamily firms close up shop, leaving institutional investors fewer choices as to which local firm to choose as a partner.

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