Nine quarters after the recession officially ended, the commercial real estate market in the greater San Fernando Valley remained a slog during the third quarter, but there have been some glimmers of hope. With job growth still sluggish, investors and banks have found a bright spot in the multifamily commercial class, which is leading to new apartment construction. Population growth, lifestyle choices and still constrained lending for single-family homes also have many expecting apartments are a safer place to invest than office, retail or industrial projects. As a result, some San Fernando Valley contractors, developers and brokerage firms are working through a tough building and real estate environment by chasing the multifamily market. One of the factors contributing to the move toward multifamily is — when compared with other classes — it comes off looking pretty good. Office space in the greater Valley, for example, had a vacancy rate of 17.5 percent in the third quarter. The office sector — which is more directly tied to jobs — is constrained by low job growth and a glut of large, hard to lease spaces. Smaller transactions, many say, are doing better, especially as businesses continue to become more efficient with their space through technology and open floor plans. Meanwhile, looming layoffs at Bank of America Corp. have the brokerage community in a flutter over what could happen to the national bank’s holdings in the area if the cuts come here. Still, brokers say, the office market is at or nearing the bottom. And to kick start all sectors, what is needed is simply more jobs. For the special report see inside this issue of the SFV Business Journal.
Multifamily Projects Fill Market Gaps
