SAN FRANCISCO-According to panelists at RealShare Bay Area there is a slight concern of reaching down the risk spectrum to get the deals done. “There is a fine line between getting creative and chasing risk,” said panelist Keith Harris, chief investment officer of Laramar Group. “Buy in markets where you think you can drive the NOI.”

When asked by moderator Eric Entringer, senior manager of Ernst & Young, asked panelists how they are originating pricing, Alexa Mazal, loan originator at Loan Oak Fund, noted that her firm’s rates are much higher than institutional rates, but said that a multifamily Bay Area deal, for example, has little risk and would probably get a lower rate. “In the private lending arena, we have more flexibility with our rates.”

As for the competition out there today, Harris noted that the buyers in the market are changing. And not only that, he said there is also a changing product that is available on the market. In addition, he explained that people want to be in new product in urban product. “A lot of the younger potential buyers want to like in the city and they want an urban environment. It started with mixed-use developments and TOD, but at the end of the day, being in the core urban environments is a great way to live especially if you are 20 and 30 years old. I think that is keeping people out of buying.”

According to panelist Stanford Jones, EVP of Institutional Property Advisors, a division of Marcus & Millichap, the buyers are the people who have been able to retool their debt, long term holders and a lot of private capital. “There also has been an emergence of the mysterious Pacific Rim money.”

Kevin Kaberna, managing director of investments at Greystar, likes the Bay Area multifamily market, where fundamentals are still strong. Other markets the firm is looking is wherever there is a good value-add opportunity. “We like Seattle a lot…there is a ton of job growth that is coming to fruition.” In addition, he said, Southern California is a player for them, but is a “f a lager…when it comes back though, it comes back roaring.” Kaberna added that Greystar’s play on the investment side is not to play in the middle of it, but on the outskirts.

On the supply side, Jones said that there was a five-year drought where virtually nothing was built. “Job growth will be focused on cutting edge technology jobs and will decimate the average American worker, so if you are a developer, you better position yourself in those markets or you are going to have trouble.”

There is 50,000 units in the multifamily Bay Area market development pipeline that will be delivered in late 2014, 2015, he added. “The only question I see in the bay area is affordability. It is so competitive on the tech side, so I think the employers will just have to pay the wages. It is an insane competitive environment.”

Loan Oak’s Mazal has seen a strong increase in rental prices due to the employment in the area. “There are challenges because of rent control but lenders are extremely aggressive on any rental properties in the Bay Area.”

A lot of what is driving the rent growth is value-add opportunities, added Sean Gorman, SVP and regional manager of agency originations at PNC Real Estate-Multifamily, such as refurbs—where people are taking a 1980s product and upgrading it.

Harris adds that Millennial occupiers want interior space upgraded with new cabinets and granite. But there is also more of a focus on common areas, parallel play areas and gathering spaces—spaces you can breakdown.

One of the challenges for firms that reposition assets, Harris added, is how to keep the assets current. “In places where it gets more competitive like San Jose, where they are building new product, it is tough to stay competitive with a refurb.”

Overall, Bay Area multifamily panelists say it remains a favorable product type in the area, but investors are having a hard time finding properties. “In coastal markets and areas like San Francisco and west Los Angeles, we will see a continued increase in rents,” said Mazal.

Kaberna added that “Funds are still very strong for multifamily. We feel like we are in the 3rd or 4th inning of the cycle. There is a lot of value to be driven through operations. It is a great market to be investing in.”