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.”
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.
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