Tuesday, January 19, 2010

Westside Los Angeles Multifamily 4th Quarter 2009: Investors Pay Premium to own in Santa Monica; West LA Offers Highest GRMs

Analysis of Westside apartment building sales in the the 4th Quarter 2009 show that investors are willing to accept a wide variety of returns in such neighborhoods as Santa Monica, Venice, West LA and Palms-Mar Vista. The dominant themes:

  • Santa Monica - Close to the beach, Gross Rent Multipliers (GRMs) are in the range of 14.0 - 14.5. Close to the freeways, or areas further north, east or south in Santa Monica, GRMs are in the 10 - 12 range. Some of the largest sales were the best-located buildings that offered the lowest GRMs.
  • Venice - The biggest sale of the quarter (15 Horizon Avenue) was for a vacation-rental by the beach offering a straight 10.0 GRM (with presumably a lot more management than a traditional rental building). Most other Venice sales are duplexes and other owner-occupied properties.
  • West LA / Palms-Mar Vista - West LA offered investors the highest GRM -- 8.7 (1973 S Bedford Street). Palms-Mar Vista was light in multifamily sales -- only one sale topped $1 million.
15 Horizon Avenue Venice15 Horizon Avenue in Venice sold for $3,600,000. Gross operating income is $359,628 -- or a 10.0 GRM. The building's twenty units have been operated as a vacation rentals.
1518 9th Street Santa Monica1518 9th Street in Santa Monica sold for $2,775,000, for a GRM of 13.9. The building has fifteen units, eight of which have below market rents, and is located a short distance to the beach and freeways.

1001 12th Street Santa Monica1001 12th Street in Santa Monica has nine units and sold for $2,495,000, or 12.6 times gross rents.
1334 16th Street Santa Monica1334 16th Street in Santa Monica has ten units and sold for $2,375,000 or 15.1 gross rents.

2584 S Centinela2584 S Centinela Avenue in West LA has eight units and sold for $1,995,000 or 11.5 gross rents. This 1988 building is not subject to Los Angeles Rent Control.

1973 S Bedford, Los AngelesThe highest GRM in the quarter was recorded for 1973 S Bedford Street. This 16 unit building, by Los Angeles standards, is a "cash cow", generating $217,320 for its $1,900,000 purchase price of $1,900,000.