Top brokers of Marcus & Millichap say commercial real estate investors are optimistic about the future of Long Beach, adding that an improving economy and major developments, along with accessible and inexpensive financing, have created a near perfect storm for a highly competitive climate, which continues to drive up prices.


Damon Wyler, who has recently been named regional manager of Marcus & Millichap’s Long Beach office, located at the One World Trade Center complex downtown, told the Business Journal that “value added” investors looking to enhance assets are becoming more aggressive on deals.


“We have seen, even in some of the larger assets in Downtown Long Beach, passive capital looking to exit and be replaced by more aggressive value added investors,” he explained. “What this tells us is that some of the capital that has been satisfied floating on the low-interest-rate environment is rolling over for investors that are very bullish on the future of the Long Beach market specifically, and will most likely invest additional capital to improve the assets that they are acquiring”


Marcus & Millichap, a leading commercial real estate investment services firm in the United States and Canada, has worked in Long Beach since 1994, covering all commercial real estate product specialties and niches, he said. However, the greatest transactional volume for its Long Beach office is in multi-family and retail segments, mimicking the Greater Los Angeles market at large, Wyler added.


Marcus & Millichap’s Steve “Bogie” Bogoyevac, an apartment sector and 1031 property exchange specialist brokering over a quarter-billion dollars in sales volume, added that the multi-family sector, typically the first to recover after an economic downturn, is currently seeing the most interest from investors.


“The market is super hot right now,” he said. “Anything that is put on the market for sale is getting a lot of attention. There are multiple offers going over asking price.”


The investment activity comes as lenders have opened up financing because of improving economic fundamentals, while interest rates remain as low as 3 percent, Bogoyevac said. This is much different than during the recession when the only investors in the market were those with cash, as access to financing was extremely tough and interest rates were less favorable, he said.


“Getting an apartment building loan back in 2008 was really, really hard,” Bogoyevac said. “They wanted large down payments. Interest rates weren’t good. To qualify it was very difficult. They just didn’t make it easy. Now lenders have loosened up quite a bit. They’ve got money to lend. They want to lend it . . . Financing is readily available, and money is very inexpensive right now. So, there are a lot of investors, and there is a lot of money chasing commercial real estate.”


Another major reason for the improving multi-family sector is the fact that rents continue to rise since there are hardly any apartment vacancies, he said. In fact, according to, the average rent for a single-bed apartment in Long Beach ($1,500) increased 5 percent this year over last year, as of June.


With rising rents and low interest rates, multifamily properties continue to be a smart investment, Bogoyevac said.


“Rents are going up and you can borrow money inexpensively so you’ve got good returns on your investment,” he said. “You’ve got a hard asset, and, if we go into inflationary times, there’s a great hedge . . . Personally, I like to invest in multi-family right now, and it’s real obvious a lot of other people do too. The market is just prime for it.”


What has created such low vacancies for apartments is mainly the improving economy, as unemployment rates have decreased and more people have jobs.


However, there is also a generational shift occurring in which younger people are more willing to pay rent instead of owning a home, Bogoyevac said, adding that it’s tougher and more of a risk financially to buy then rent.


“Qu­­alifying for a home is much more difficult than it used to be,” he said. “Many younger people saw in the recession how many people lost homes, so there’s some fear to having that happen to them.”


In addition, Bogoyevac said there’s a different attitude toward buying a home today as well, adding that many renters who would be first-time homebuyers may have jobs that force them to move around a lot, making renting the more practical option.


“It’s not like back in the old 1930s, ’40s and ’50s when owning a home was the dream and you put everything into that,” he said. “That’s kind of not how people are anymore. They’re okay with renting forever.”


Bogoyevac added that recent public and private developments in Long Beach, which he called a “mini Los Angeles without rent control” that has diverse “pockets” with a wide range of nationalities and income levels, have improved the quality of neighborhoods and have also been a major factor in attracting investors.


For instance, a 21-unit apartment building on 5th Street in Downtown Long Beach sold earlier this year for $3.5 million after receiving 10 offers, Bogoyevac said. A major selling point was the property’s proximity to the new Gov. George Deukmejian Courthouse, which brought in new retail tenants.


With so many offers, the buyer ultimately paid cash in order to have an edge in acquiring the property, he said, adding that the deal closed in just 10 days. Since then, the buyer has refinanced the property to get most of the money back.


Although prices for apartment buildings have continued to rise in the last few years as the economy has steadily improved, in recent months prices have started to level off as interest rates have ticked up a bit, cautioning some buyers to pull back, he said.


“In the last maybe three months or so I’ve started to see a little bit of a plateau,” Bogoyevac said. “It’s gotten to the point where interest rates started to pick up a little bit and so that kind of changes what your returns are going to look like as an investor. So buyers started to pull back a touch.”


However, there is still plenty of investment activity in the Long Beach market, he said. Though there have been rumblings of an upcoming rise in interest rates, Bogoyevac said he expects rates to gradually increase with the slowly improving economy rather than spike up, which would bring the real estate market to a halt.


As for the retail real estate market, Wyler, who joined Marcus & Millichap’s Newport Beach office in February 1999 where he specialized in retail property investments and was a member of the firm’s National Retail Group, said demand for grocery-anchored, neighborhood shopping centers or single-tenant properties that carry strong credit remain “incredibly strong,” which has been the case for the past three to four years.


The trend, he added, is toward secondary markets or submarkets as investors search for high yield.


As for the outlook for commercial real estate in general, Wyler said the Long Beach market has “enviable assets” that will continue to attract investors over the long term. He added that, while the real estate market is cyclical, new developments in Downtown Long Beach, on Pine Avenue and at The Pike will likely have “positive reverberating effects that will spread throughout the city.”