fbpx Skip to main content


With 226 transactions in the greater South Bay, volume remains quite typical compared to normal Q1 results of previous years, except for 2020.  Although inventory remains frustratingly low, this continued normal level of transaction volume illustrates the high level of demand and velocity to trades.  It’s not that sales aren’t occurring, just too many buyers for the available supply that’s catching headlines.


For the first time ever, we surpassed $500 per square foot in Q1 2022 for average sales in the Greater South Bay multi-family market.  Averaging out at $527/square foot, that’s a price increase of 5.8% over only one quarter, and an 8.7% increase over last year’s overall average of $485 per foot.  As with many segments of the economy, apartment building prices and rents have experienced high levels of inflation, impacting pricing and affordability across the board.


Income metrics for multi-family sales continued the trajectory we’ve seen over the last few years as cap rates have compressed and rent multiples have risen.  GRMs in the region averaged 19.0 and cap rates were 3.6% in aggregate, indicating a persistent low yield environment.  Despite average residential interest rates increasing by two full percentage points during the quarter, demand for apartment assets has remained strong and we have not seen a corresponding increase to cap rates in our area.  There remains a wide spread of 3 multiples in GRM between 2-4 unit sales and 5+ commercial sales, but we do expect this to narrow as these rate increases have been more pronounced in the 2-4 unit lending space.


An excellent leading indicator for changes to the market in the immediate future, we’ve been watching inventory levels closely for clues to the market’s reaction to rapidly rising interest rates.  We see no changes to the direction of the market in the immediate future here.  Even on a monthly basis, active listing counts are hovering around the 350 level, even lower than all of last year, which was already a low inventory environment.

Leave a Reply

Close Menu