How Value-Add Competes With New Construction
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Joe Leon: “These buildings are for people who want to live in that area and don’t want to pay those class-A rents or just can’t pay those rents.”
LOS ANGELES—Cap rates are compressing, prices are up and competition is high, but value-add investors are still staying extremely active in this market; however, the supply/demand imbalance in Los Angeles is also fueling major multifamily development in markets throughout the city. The question of value-add investors competing with new construction product came up during an interview about MWest Holdings’ recent acquisition of Emerald Terrace in Korea town. According to Joe Leon, a JLLmanaging director that brokered the deal, value-add is unique positioned to compete with new construction because they can withstand lower rental rates and are better positioned to hold through a downturn…
