Not all the news on the residential real estate front is bad these days, especially if it involves apartments.
NMS Properties Inc., a Westwood-based multifamily developer and property manager, took just a few months to fully lease its Olympic Studios project in Santa Monica at 2001 and 2029 Olympic Blvd.
The 100-unit first phase of the development, which opened in December, was fully leased by March. The smaller 65-unit second phase, which opened June 1, was fully leased by the middle of July.
Neil Shekhter, head of NMS, believes that the quick leasing of the properties is indicative of both pent-up demand in Santa Monica, and the project’s unique features and affordable rent.
The complex is built on land zoned for light industrial use, so units needed to be constructed as tiny lofts – ranging in size from 350 to 375 square feet – to meet zoning requirements. As a result, some of the units rented for as little as $1,110 a month, despite full-scale kitchens and big windows intended to give them a more spacious feel.
“In Santa Monica today there is really no new product in this price range,” Shekhter said. “I believe in any rental market you can make a product that works for that particular market.”
Shekhter’s other Santa Monica apartment project isn’t as affordable, though, and the leasing reflects that.
Luxe@1539, a $20 million project on Fourth Street across from Santa Monica Place, opened in early July and its 62 units are only 65 percent leased. Shekhter has made some price concessions on monthly rents, which are $1,749 for a studio and up to $2,879 for larger units. He said a year ago the rents would have been 10 percent to 15 percent higher.
Shekhter is betting that the location across from the mall will allow him to fully lease the property in the next month.
“The economy is soft but there is still high demand for quality housing,” he said.
Santa Clarita Sale
A Westlake Village family has sold a 93,228-square-foot industrial facility in Santa Clarita that once housed its now-defunct business. The $9.87 million deal with buyer Side Yard LLC closed Sept. 3.
The family, whose name was not disclosed, had long used the 26455 Ruether Ave. property as a showroom for its furniture business. However, the family closed the business last year because of slow sales and then leased the site to Racer’s Edge, which operated an indoor go-kart track that also went out of business, according to broker Gary Cohen.
Side Yard, which paid $106 per square foot, will use the property for warehousing and distribution. It had made a “substantially higher” offer to purchase the property a year ago, but the family decided to lease the building to the go-kart track operator instead, Cohen said.
“I guess you could say the buyer got a good deal. He waited and got it for less,” said Cohen, who heads brokerage Cohen Commercial Real Estate Group Inc. in Thousand Oaks.
The buyer was represented by Chris Jackson and Todd Lorber of NAI Capital Inc.
A family member on the seller’s side did not return calls.
Port Update
Traffic is down dramatically at the ports of Los Angeles and Long Beach, and the nearby 250 million-square-foot industrial real estate market is feeling the effect.
The vacancy rate in the area has shot up from just 2.5 percent in the fourth quarter of 2007 to 4.8 percent, according to a report on ports and global infrastructure by brokerage Jones Lang LaSalle Inc. It’s not expected to get better anytime soon.
“We are still in middle of a recession; real estate will still lag,” Craig Meyer, managing director and head of Jones Lang LaSalle’s industrial practice, told the Business Journal. “2010 won’t be any worse but instead more of the same. We don’t expect to see significant uptick until late 2010 and into 2011.”
Rental rates also have taken a hit. The average asking rate in second quarter 2007 was 69 cents on a triple net basis, but dropped 13 percent to 60 cents this past second quarter. With companies still exiting the market, Meyer predicted that pricing could drop another 5 percent to 10 percent before rebounding. “It is negative absorption now, and next year will be a year of (more) negative absorption,” he said.
Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.
