CITYVIEW SELLS TWO NEW CONSTRUCTION APARTMENT ASSETS IN LOS ANGELES AND ORANGE COUNTY AT RECORD PRICES.
Mid-rise apartment assets continue to see record pricing, and investor appetite is stronger than ever. Developer Cityview has just sold two new construction apartment assets, The Pearl in Los Angeles and Baker Block in Orange County for a total of $283 million. These deals illustrate the strong demand for well-located apartment deals with accessible rents.
“This exceeded our expectations,” Sean Burton, CEO of Cityview, tells GlobeSt.com. “We knew the market was strong. We had a plan to sell these assets this year because we really like the markets that they are in and we were happy with how the projects turned out. Between the two assets we had 30 offers, and a number of competitive offers from major institutions and high-net worth individuals. We were really happy with how the sale turned out.”
It wasn’t only the strong pricing that is noteworthy, but the strong interest as well. It shows that while pricing is at its peak, investor demand has not yet waned. “We knew we would have a lot of interest, but we didn’t realize how much interest that we would have,” says Burton. “Part of it is the fact that there is not that much product that is high quality and brand new in these markets.”
Mid-rise product in particular is getting the most attention from investors. “The overall rents are lower so you have a much broader renter pool,” says Burton. “That is why this is our bread-and-butter asset class. When you build mid-rise with great amenities, there is a lot of appetite for it.”
As a result, Cityview is sharply focused on builing mid-rise assets in very specific submarkets. “People think the multifamily market is soft because there is a high vacancy in Downtown Los Angeles, but that is a small part of the market,” says Burton. “We haven’t built in that market because it is all luxury high-rise and it is oversupplied because of the new product. We picked Koreatown because it is the densest part of Los Angeles. It is mid-point between all of the jobs being created in Hollywood and all of the jobs Downtown. We also built a product that rents could rent for less than $2,000 per month. When you have product like that, there is a lot of demand, and investors understand the value of those properties.”
Cityview plans to remain an active developer in this market segment thorugh the next year and beyond. “We are continuing to build the right product in these key markets,” says Burton. “We are about to break ground on a project in the Silver Lake/Echo Park area, and we are about the break ground on a project on Pico Blvd. near LACMA. We have a few other projects in the Bay Area as well. We are active, but we are trying to stick to our strategy of building mid-rise product near transit and near jobs. We are trying very had not to move to riskier product or secondary or tertiary markets where there is less stability in the long run.”