A two-story office building in Long Beach known as Congressional Place has sold for $41 million. The 73,769-square-foot building is pegged for multifamily redevelopment.
Washington-based Holland Partner Group, which has an office in Long Beach, purchased the 2.5-acre property at 6700 E. Pacific Coast Highway from Irvine-based real estate investment firm ValueRock Realty.
Newmark Group Inc.’s Chris Benton, Anthony Muhlstein, Kevin Shannon, Bill Bauman, Ken White and Sean Fulp represented the seller in the transaction.
“The multifamily fundamentals in that south part of Long Beach are phenomenal,” Benton said. “You have an asset that could be better utilized as an apartment building, and apartment rents are going through the roof down there, and you’ve got this great lifestyle.”
He said that the marketing for the site was “limited” and that 10 groups were presented the opportunity, of which eight made offers.
“They are just not making any more beach, waterfront real estate for multifamily, so when it becomes available we get all eyes and all ears,” Muhlstein said.
He added that Long Beach was viewed as a great city to develop in because of its “proactive political environment.”
Other conversions are planned in Long Beach as well. In December it was announced that Onni Group of Cos. purchased the 6.2-acre Marina Shores in Long Beach for $67.9 million.
Regency Centers Corp. sold the property, which is currently a shopping center. Newmark represented both parties.
“You’re going to start to see more properties that no longer work as office (or retail) buildings converted into multifamily,” Muhlstein said. “With retail you’ll see antiquated strip centers being redeveloped into apartment buildings. We do not believe retail is dead. Good retail will thrive, but bad retail will be replaced, and the same can be said in many cases for office.”
In addition to redevelopment sites, sales of existing multifamily properties are driving activity in Long Beach as well.
Last month it was announced that 442 Residences, a 94-unit property at 442 W. Ocean Blvd. in Long Beach, sold for $48.5 million.
Sherman Oaks-based MWest Holdings purchased the property from Ensemble Real Estate Solutions & Investments, which has an office in Long Beach.
Newmark represented the seller in the transactions.
Benton called interest in multifamily assets “extremely strong,” adding that a lack of inventory on the market was driving it.
And there are some new investors going after the product type.
“You have funds raised that were traditionally allocated to office” going to multifamily instead, Muhlstein said.
“Investor appetite is as high as it’s ever been,” Benton added. Long Beach has “one of if not the best job stories in the country with all of the FAANG tenants … and the unaffordability of buying a home. There are a lot of other fundamentals but that’s the easiest one to point to. We’ve got great jobs, and it’s difficult to buy a home.”
Benton added that most of the housing seen near the water would be higher-priced, luxury product.
And the rest of this year he expects to see “more of the same” and additional “big trades” in Long Beach.
“The fundamentals are lined up perfectly. It’s a pro-business, pro-development city, you are seeing fantastic rent growth and it’s still an affordable beachfront living community. We think institutional capital will continue flowing to Long Beach,” he said.