In a prior post, we highlighted the sunny outlook for commercial real estate projects in Southern California. Essentially, there is a strong sense of confidence among commercial real estate developers that is expected to last through 2018. With such optimism on the commercial side of real estate development, can the same be said for residential projects?
According to a recent article, multifamily residential projects will continue to grow despite a projected increase in monthly rents. Construction permits have been approved for projects across Los Angeles County, Orange County, the Inland Empire and San Diego County amounting to 38,000 new rental units in the coming years. Even with so many more units coming on the market, it appears that developers are still having difficulty keeping up with demand.
Part of this is attributable to growth in employment levels, which have reached pre-recession levels. With more people working and coming from different regions of the country to find work, they need places to live. Additionally, the point of entry to homeownership is still particularly difficult in Southern California. The region’s home prices are nearly twice the national average, and regulatory controls constrict the market, which keeps many would be homebuyers as renters.
Such a rosy outlook will certainly draw developers. But before embarking on a new project, it is prudent to have an experienced real estate attorney review the construction and financing documents so that your interests may be protected.