As the economy continues to improve, so too does the national housing market. New housing starts are up dramatically from the record lows set in 2011. According to Commerce Department statistics, there are more residential units, primarily apartments, being built than at any time in the past five years. Further testimony to the demand, we are once again seeing bidding wars taking place for well-located, single- and multi-family projects in almost every major market in the United States.
Los Angeles is an excellent example of the recovering housing market. Last month, the Associated General Contractors of America reported that Los Angeles showed a 10 percent increase in housing-related construction jobs year-over-year, trailing only Dallas and Houston in the number of new construction jobs. Tom Holsman, CEO of the Associated General Contractors of California, said of the report, “If you drive down La Cienega Boulevard or La Brea south of Sunset, you’re going to see construction going up for multi-family dwellings at a pace that you haven’t seen in 10 years.”
Gidi Cohen, President of Cohen & Associates, a Los Angeles-based boutique development and real estate investment firm, agrees. “It feels very much the same as it did between 2001 and 2006, when we built and sold 400 multifamily units.”
In May, the Los Angeles Downtown News reported that the last few months were particularly notable for new condominium investments in the city’s urban core. Despite the apparent demand, investors still need to have a backup plan.
“We focus and dedicate our time to the underwriting. We underwrite deals as apartment building (as a plan B), so that if the properties don’t sell as condos, we have a good building in a good location as a rental. This has worked very well for us,” says Cohen.
Cohen & Associates is currently working on several ground-up development projects in Los Angeles and New York. If you are interested in these deals or Cohen & Associates investment opportunities, please contact us for more information.