Daniel Mense, director with Ness Holdings, Inc., discussed some of the latest trends in Los Angeles real estate, including international investment in the market, in the latest edition of the NAREIT Podcast.
Mense has written that he is observing growth in the number of smaller and mid-size real estate deals being made in L.A. by larger instiutional investors. Mense said that is especially true in the multifamily and industrial sectors.
"We're actually seeing it now on several of the deals that we've been doing," he said. "These bigger companies are coming in and looking to acquire what we would consider small to mid-size deals. Before, with these types of deals, you'd find smaller investment shops pursuing them. Now, we're seeing larger players coming in and swooping up these properties."
Larger investors currently view real estate as a "safe place to put their money," according to Mense.
"There's some concern, given all the volatility in the equity markets right now," Mense said. Institutional investors are "looking for a place to stash their money away where they can rely on a stable income stream without a lot of fluctuation. Also, I think these smaller investments tend to offer some upside on the back end as well, so while they get to enjoy a nice, stable income stream, there's also some good upside in the appreciation of the value of these properties."
Mense said the new interest in smaller transactions is making it tougher for smaller investors to remain competitive in the marketplace. Instead, private real estate companies such as Ness Holdings are pursuing more off-market deals, according to Mense, and are becoming more creative in their approach to sourcing deals.
Mense also talked about the level of interest in the LA. market from international investors. He said interest is particularly strong among Asian investors.