Few large developers have opened apartments of note in Los Angeles since the financial meltdown of 2008 put the brakes on the county’s housing market.
Legacy Partners has three.
The Foster City company, which has a regional office in Irvine, opened projects in West Hollywood and Hollywood in the last few years. And is throwing open the doors this month on its latest: a 165-unit luxury building at 5550 Wilshire Blvd. on the Miracle Mile that it broke ground on last year.
The projects underscore the advantage that institutional-class builders of multifamily properties have over smaller local developers, especially in depressed markets.
“A group like Legacy, it has access to capital and construction funds. The mom-and-pops don’t have access to that capital, can’t build,” said Brent Sprenkle, an associate partner at Hendricks & Partners, a multifamily brokerage. “When you come on the market you are going to be the only project on the market.”
Meanwhile, the company’s 7950 Sunset Blvd. complex in West Hollywood, which opened in November 2008 at the height of the financial meltdown, is 95 percent leased. Not bad for a company navigating the tricky waters of a recessionary market.
The company’s biggest new project, 1600 Vine St., which opened in January next to the W Hollywood Hotel & Residences, is 70 percent leased.
In many ways, the $265 million development is the firm’s flagship L.A. offering. The 375-unit building includes a popular Trader Joe’s grocery store and a newly opened Wells Fargo bank branch.
Tim O’Brien, who heads the Southwest region for Legacy, said that the firm’s year-over-year revenue from its apartment portfolio is down slightly, but he is optimistic.
“There is strong demand in the market,” he said.
The company is hoping that the momentum carries through to its $125 million Miracle Mile project, where leasing will begin this month. The project, which was built by Legacy for owner BlackRock Inc., a huge New York money manager, was originally conceived as condos before the market softened.
“(BlackRock) made the determination that they wanted to hold on to it and lease it up,” he said.
As a result, the units have condo-level finishes such as stainless steel appliances. Amenities include a swimming pool, two-floor fitness center and club room. The building’s one- and two-bedroom units range from about 800 to 1,600 square feet; prices range from about $2,000 to $5,000 a month.
O’Brien said the company’s focus is leasing existing assets while working on entitlements “for when the time comes” to build again. The company owns property entitled for 175 residences that is adjacent to its Miracle Mile project, and is in the process of entitling property it owns in Marina del Rey.
Legacy is looking to further expand its presence locally, even though the firm isn’t sure when the market may be ready for additional construction.
This spring it entered into a partnership with KBS Capital Advisors LLC in the form of a nontraded real estate investment trust, called KBS Legacy Partners Apartment REIT. O’Brien said that Los Angeles is a target market for the new investment vehicle.
“Los Angeles has always offered great, stable rent growth,” he said. “Especially postrecession, where you have lost 20 percent in rents. We have the opportunity to make up existing rents.”
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