Two multifamily properties in Hermosa Beach have sold for a combined $275 million.
Prime Residential purchased the adjacent properties from an institutional investor.
Kevin Green, Greg Harris and Joseph Grabiec from Marcus & Millichap Inc.’s Institutional Property Advisors represented the seller and found the buyer in the transaction.
Harris said the properties’ close proximity would allow the buyer to run them together.
“The purchase gives the buyer a sizable footprint in a coastal location, a compelling value-add opportunity and the ability to operate the properties as a single entity,” Harris said in a statement.
The larger property is the 285-unit Playa Pacifica, which sold for $162.5 million.
The property was built in 1972 before being partially renovated in 2015 and 2016. It sits on 4 acres and has studio, one- and two-bedroom units.
The Playa Pacifica is located at 415 Herondo St. and has eight floor plans. The average apartment size is 590 square feet.
Amenities at the complex include two solar-heated swimming pools, a fitness center, a business center and a clubhouse.
The other property to sell was the 169-unit The Gallery, which sold for $112.5 million. The Gallery, located at 414 2nd St., was built in 1971 and partially renovated in 2003 and 2004.
The 2-acre property's units are a mix of studios, one-bedroom, one-bedroom-plus-loft, and two-bedroom units. The average apartment size in the building is 831 square feet.
Amenities at the property include a pool and a fitness center.
The two properties make up a large chunk of Hermosa Beach’s apartment stock.
“The sale represents the acquisition of 24% of the entire apartment stock in Hermosa Beach and nearly 70% of the like-kind apartment stock in Hermosa Beach and Manhattan Beach,” Green said in a statement.
Grabiec added that the wealthy market lacked new supply.
“Hermosa Beach is one of the most affluent communities on the West Coast and there have been no institutional-sized multifamily properties built here in the last 50 years,” Grabiec said in a statement.
“The average annual household income in Hermosa Beach is over $190,000 and more than 55% of the population lives in renter-occupied housing, which creates compelling demand for apartment homes,” he added.
As of the second quarter, the vacancy rate for apartments in the beach city was 3.7% while the average effective rent was $2,712, according to IPA.
The seller had purchased the properties in 2006 for $133 million.
Investments, which slowed during the Covid-19 pandemic, have since picked up. Investment volume through July in Southern California was $20 billion, up 30% front the same period the year before, according to research from CBRE Group Inc.
Apartment properties saw investments of $6.8 billion during that time frame, which amounted to 36% of investment volume, an increase of 140%, according to CBRE.
Industrial real estate also saw year-over-year increases, while office and retail sales volume fell.
