February 13, 2017

West Coast Real Estate Update: Feb. 13, 2017

Holland & Knight Update
Susan Jennifer Booth | Stacie Andra Goeddel | Robert M. Haight Jr. | Karl J. Lott | Douglas A. Praw

Los Angeles, Seattle Top List of Best Markets for Multifamily Investment

Marcus & Millichap's 2017 National Multifamily Index (NMI) ranks Los Angeles and Seattle first and second, respectively, among 46 major domestic markets for investment in multifamily properties based on forward-looking economic indicators and supply-and-demand variables. Los Angeles rose 10 spots and Seattle rose seven spots from their respective 2016 rankings.

The report expects the vacancy rate in Los Angeles' multifamily sector to drop to 2.6 percent in 2017 and also predicts minimal growth in the supply of multifamily residential units. These factors are expected to result in a 5.4 percent increase in rent, resulting in an average of $2,095 per month by the end of 2017. The report makes no mention of Measure S, an initiative slated to be voted on in March that, according to opponents of the measure, would further constrain the supply of apartments in Los Angeles if passed.

Seattle owes its rise in the rankings to robust job growth. Amazon recently announced plans to add 100,000 new jobs in the United States, some of which will be in the company's Seattle headquarters. Other West Coast cities making the NMI top 10 list include Oakland, Portland, San Francisco, San Jose and San Diego, ranked consecutively in positions five to nine.

FAA, Santa Monica Reach Settlement to Close Santa Monica Airport

In a decision that will end what has been years of contentious litigation, the Federal Aviation Administration (FAA) and the city of Santa Monica recently reached a settlement that will immediately shorten the runway at Santa Monica Airport and close the airport entirely in 2028.

Santa Monica has been fighting in court to shut down its airport for years, upset at the noise and potentially harmful exhaust created by the aircraft – often corporate jets used by business executives and celebrities – that use the airport. The FAA has argued the airport must stay open until at least 2023, if not in perpetuity, under federal agreements entered into during World War II when the airport was used by the military.

Santa Monica plans to redevelop the airport into a park, recreational facilities and other non-aviation uses. However, the airport's closure is likely to affect development of nearby properties as well. Height restrictions could be eliminated for new buildings constructed near the airport or on land that was below the airport's flight path.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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