Multifamily properties in desirable areas are still in high demand. Through the first eight months of 2019, L.A. County’s 10 largest multifamily sales fetched a combined price of more than $1.5 billion, according to CoStar Group Inc. data. The total market reached $5.6 billion in sales for the period, up slightly from a year earlier.
“Multifamily has ridden to the top of the heap again this year as the most desirable, safe and easy to understand of all the commercial real estate classes,” said Dean Zander, an executive vice president at CBRE Group Inc. “We have occupancy at 97% to 98%, and rents are stable.”
Kitty Wallace, an executive vice president at Colliers International Group Inc., said investors are still snapping up properties despite concerns of a possible recession.
“Those who are in the market and want to be in the market are looking more aggressively,” Wallace said.
Since 2010, she added, rents have increased every quarter. Also, the population is growing, and the economy is diverse, which leads to investor interest in properties that come on the market.
“It’s difficult to acquire well-located core assets,” Wallace said. “The people out here are buying more aggressively today than they were before because they know it’s a good opportunity.”
Downtown focus
Of the top 10 sales, five were in downtown, and two were recapitalizations where a new joint venture partner was brought in.
“If you look at the metrics of downtown, it’s a place that looks promising in the long term, and people want to bring money there,” Wallace said.
Laurie Lustig-Bower, an executive vice president at CBRE, said there’s a lot of new product on the market, particularly in areas like downtown. Much of that was built by developers with the intent to build, stabilize and sell, which is what’s happening now.
“Most of the developers that build usually build and sell and roll the profits into building the next property,” Lustig-Bower said.
She added that an influx of jobs in downtown has increased interest from renters who want to be close to work.
The largest sale so far this year was the Glendon, a 350-unit building in Westwood purchased by Santa Monica-based Douglas Emmett Inc. for $365 million. Holland Partner Group’s Grace on Spring and Griffin on Spring brought in $203.5 million and $199.6 million, respectively, as part of a $403 million portfolio sale to Daydream Apartments.
Holland Partner Group also recapitalized its 1111 Wilshire Apartments development, bringing on Pacific Life Insurance Co. as a joint venture partner.
Forward look
Experts agree that multifamily properties will continue to be in hot demand.
“Multifamily is a very predictable investment for the future with a lot of stability due to the fundamentals regarding supply and demand,” Bower said.
Wallace has no doubts Southern California will continue to do well.
“When the markets go up or the markets go down, I can always sell a property in Southern California,” she said.
- THE Glendon
In June, Santa Monica-based Douglas Emmett Inc. purchased the 350-unit apartment building in Westwood, which also features 50,000 square feet of retail space.
Address: 1060 Glendon Ave.
Buyer: Douglas Emmett Inc.
Seller: Clarion Partners
Price: $365 million
- Grace on Spring
Holland Partner Group sold its 300-unit Grace on Spring downtown as part of a two-piece sale in July.
Address: 732 S. Spring St.
Buyer: Daydream Apartments
Seller: Holland Partner Group
Price: $203.5 million
- Griffin on Spring
Holland Partner Group sold its 275-unit Griffin on Spring, also downtown, as the other part of a combined $403 million sale in July.
Address: 755 S. Spring St.
Buyer: Daydream Apartments
Seller: Holland Partner Group
Price: $199.6 million
- Next on Sixth
Equity Residential purchased the 398-unit property in Koreatown in August.
Address: 620 S. Virgil Ave.
Buyer: Equity Residential
Seller: Century West Partners
Price: $189 million
- Wren
In January, Mack Real Estate Development brought in State Street Global Advisors as a joint venture partner for the 362-unit building downtown. The group replaced joint venture partners Capri Investment Group and AECOM.
Address: 1230 S. Olive St.
Price: $180.1 million
- The Colony
at the Lakes
The 450-unit building in West Covina sold for $171.5 million in June.
Address: 301 S. Glendora Ave.
Buyer: MetLife Inc.
Seller: LMC
Price: $171.5 million
- Stoa
The 237-unit building in downtown sold in July.
Address: 222 S. Main St.
Buyer: Equity Residential
Seller: Holland Partner Group
Price: $105.2 million
- 1111 Wilshire
Holland Partner Group brought in Pacific Life Insurance Co. as a joint venture partner for the 210-unit building in downtown in June. The previous partner was UBS Realty Investors.
Address: 1111 Wilshire Blvd.
Price: $91.3 million
- THE Landing
at Long Beach
The 206-unit building sold
in February.
Address: 1613 Ximeno Ave.
Buyer: Friendly Franchisees Corp.
Seller: Western National
Group Inc.
Price: $72 million
- Meridian Place Apartment Homes
The 202-unit complex in Northridge sold in August.
Address: 9423 Reseda Blvd.
Buyer: MG Properties Group
Seller: Western National
Group Inc.
Price: $70.3 million
