Executive Summary for Sherman Oaks

The Sherman Oaks 5+ unit multifamily market saw a notable increase in transactions during 2025, driven by improved pricing discovery and a growing alignment between buyer return expectations and seller motivations. While deal volume accelerated, overall pricing metrics continued to recalibrate, reflecting a market that remains yield-focused rather than growth-oriented. Investors demonstrated increased selectivity, prioritizing assets with stronger in-place cash flow, lower operational friction, and clearer paths to durable income. As a result, cap rates expanded and income multiples compressed, and bifurcation emerged between RSO-controlled and AB1482 buildings.

RSO-controlled multifamily assets experienced a rebound in transactions throughout 2025, with total sales increasing meaningfully. As such, valuation metrics remained under pressure, with the price per unit essentially f lat year-over-year and price per square foot declining. Investors continued to prioritize yield, driving a notable expansion in cap rates and meaningful compression in gross rent multiples. Overall, the 2025 RSO market reflects increased deal flow but sustained underwriting discipline, with buyers remaining selective and valuation outcomes increasingly asset-specific, rather than indicative of broad pricing recovery.

AB 1482–regulated multifamily assets continued to attract investor interest in 2025, with deal volume increasing modestly year-over-year. However, pricing metrics corrected meaningfully from 2024 levels, as both the price per unit and price per square foot declined, reflecting a broader normalization in values amid tighter underwriting standards.

 

Executive Summary for Studio City

The Studio City 5+ unit multifamily market experienced a meaningful increase in deal activity during 2025, reflecting improved market liquidity and renewed buyer engagement. Despite the rise in transactions, pricing remained largely stable on a per-unit basis, while the price per square foot softened modestly, indicating increased pricing discipline. Cap rates expanded slightly year-over-year, suggesting buyers are underwriting higher yield requirements amid ongoing capital market uncertainty. Overall, Studio City remains a highly desirable, liquid submarket where buyers are active but increasingly selective on pricing.

 

The Studio City RSO-controlled apartment segment saw a modest increase in transactional activity in 2025, indicating improved liquidity as buyers and sellers found greater pricing alignment. Despite this uptick in sales, valuation metrics corrected meaningfully, with both the price per unit and price per square foot declining year-overyear, reflecting continued investor caution toward rent-controlled assets. Overall, the 2025 RSO market in Studio City reflects selective buyer demand, heightened return expectations, and pricing outcomes that remain highly asset-specific, rather than indicative of a broad market recovery.

 

The Studio City AB1482 multifamily segment experienced a pronounced rebound in 2025, following a year of limited transactional activity in 2024. With only two sales recorded in 2024, pricing benchmarks that year were less indicative of broader market conditions, and the increase to seven transactions in 2025 reflects a meaningful return of buyer confidence. Pricing strengthened on a per-unit basis, while the price per square foot remained relatively stable, indicating renewed demand for newer, less-regulated assets.

 

2026 Outlook

Heading into 2026, AB1482 assets are expected to continue outperforming due to predictable rent growth and improved financing sentiment. Pricing gaps between RSO and AB1482 are expected to widen further. RSO properties will likely trade at increasing discounts, unless there is meaningful regulatory reform or interest rates decline materially. Transaction volume is expected to remain healthy, with disciplined underwriting and selective pricing driving deal execution.

 

What this means for Your Property

For owners of multifamily properties in Sherman Oaks and Studio City, the 2025 market data highlights the importance of understanding how regulatory classification directly impacts value, marketability, and buyer demand.

 

• If your property is subject to AB1482, you are operating in the strongest segment of the current market. Buyers are actively seeking assets with CPI-based rent growth, predictable underwriting, and scalable operations. Wellmaintained AB1482 buildings with below-market rents or operational upside can command premium pricing, shorter marketing periods, and more competitive buyer pools.

 

• If your property is subject to RSO, value is driven primarily by in-place cash flow and long-term yield rather than future rent growth. Buyers underwrite these assets conservatively, factoring in extended hold periods, regulatory risk, and limited ability to offset rising operating expenses. As a result, RSO properties typically trade at wider cap rates and lower GRMs, and require sharper pricing strategies to attract qualified buyers.

 

Across both asset types, properties that are well-operated, transparently managed, and realistically priced are transacting. Owners considering a sale in 2026 should focus on aligning pricing expectations with current market realities, while those holding long-term should evaluate refinancing, operational efficiencies, or capital improvements that enhance durability and cash flow.