Newmark Knight Frank has expanded its multi-family investment group in Southern California. Blake Okland, National Head of Multi-Family Investment Sales, Kevin Shannon, Co-Head of US Capital Markets, and Sean FulpThe head of the Private Capital Group will take over the management of the group. The group offers multi-family investors a multidisciplinary experience.
"When Chris Benton returned to the Newmark Multifamily Capital Markets platform earlier this year, we looked at how we could integrate existing talent under one roof to create a more powerful service offering for our clients," Okland told GlobeSt. com. "Chris, who works with Anthony Muhlstein and teams up with Sean Fulp and Kevin Shannon, is a natural extension of the trends Newmark is already following in the industry as real estate product types and sources of capital continue to converge."
The structure of the group gives clients access to brokers with experience in all commercial asset classes. "Several of our clients invest in many, if not all, of the real estate grocery groups," says Okland. “According to NKF Research, around 87% of real estate capital allocations in 2020 will be for office, multi-family and industrial products. The ability to advise our clients in these main disciplines enables us to provide advice on their investment strategy and portfolio more synchronously and to offer first-class services. A customer partnership arises when you understand the needs and offer holistic solutions. "
While it may seem strange to expand this platform due to the pandemic and economic disruption, Okland says this is a long term strategic change. "This type of expansion goes beyond the pandemic, but the current market turmoil caused by the virus is creating some kind of pause or reset button and recovery won't be the same for all product types," he says. “While housing, life sciences and supply chain logistics are driving the recovery, the office sector will recover in a different way than retail and hospitality. With this in mind, it couldn't be more topical to bring a multidisciplinary consulting solution to market. "
This does not mean that brokers do not react to changes in the market. The housing industry has changed and slowed down during the pandemic. "Apartment sales in Southern California have slowed since the pandemic started. According to NKF Research, there will be an increase in closed deal activity in the fourth quarter, but it won't quite reach the normal pace before COVID. Los Angeles unemployment rate is still close to 20%, and investors are looking for data points to rent after COVID and stimulus. About 70% of our investors in Southern California are forecasting negative rental growth for the next year, ”Shannon told GlobeSt.com. "In addition to other actuarial adjustments, this leads to a bid-ask gap, which keeps a considerable number of multi-family products on the verge."
However, there is still movement in the market and capital for new deals. "The good news is that Fannie and Freddie Mac's debts are better than they were before COVID, and the vast majority of multi-family investors plan to increase their footprint in Southern California over the next two to three years," added Shannon. "Ground-up development is the number one strategy for multi-family investors in Southern California over the next 12 months."