Multifamily Only Commercial Real Estate Sector on Upswing: Vacancies Down 1% Nationwide in Past Year

The multifamily sector is the bright light of hope in the commercial real estate sector according to a recent report by the National Association of Realtors.

"The multifamily sector can expect increased demand as the economy creates jobs and new households are formed, likely in the second half of this year,” says Lawrence Yun, NAR chief economist.

Nationwide, vacancy rates are predicted to fall to 6.4% by Q3 2010, from 7.3% in Q3 2009.

In Los Angeles, investors are eying the 6%-range cap rates which haven't been around for a few years, and are considering this a generous return compared to the 1%-range returns on CDs. With volatility's recent return to the stock market (including a nausea-inducing one-day Dow drop of 1,000), the idea of a "safe haven" on known ground is also appealing. Also reassuring investors is the stabilization of vacancy rates and the lack of distressed properties on the market.

Although vultures have been seen swooping around many a vacant office tower or unoccupied warehouse, nary one is to be seen hovering over your local twelve-plex.

Los Angeles Apartment Vacancy Rate 5.4%, up .4% in 1 Year and 1.4% in 2 Years. Anyone Surprised? It Could Be So Much Worse.

 
Updated May 11, 2011: See our updated analysis about apartment vacancy rates in Los Angeles, which now stands at 4.9%

Considering the recent economic turmoil and its impact on consumers' pocketbooks, the apartment vacancy data for the City of Los Angeles looks surprisingly robust.

From 2006 - 2010, vacancies have risen steadily from a baseline of 3.5% to the current 5.4%. Not great news for the average apartment owner, but certainly no reason to hit the panic button.

The vacancy breakdown of the four geographic areas in March 2010:

• Central Los Angeles: 5.5% -- 416,000 units
  
• San Fernando Valley: 5.2% -- 224,000 units
  
• West Los Angeles: 6.1% -- 116,000 units
  
• Harbor Area: 4.0% -- 31,000 units

The largest district, Central Los Angeles, includes neighborhoods like Wilshire (95,000 units, 5.4% vacancy), Hollywood (75,000 units, 6.1% vacancy), South Central (49,000 unit, 7.2% vacancy) and Silver Lake / Echo Park (18,000 units, a low 4.7% vacancy.) The lowest vacancy was recorded in Boyle Heights (3.8%).

The second largest district, the San Fernando Valley Area, includes North Hollywood (42,000 units, 5.1% vacancy), Van Nuys (37,000 units, 5.1% vacancy) and Sherman Oaks-Studio City (5.3% vacancy). The lowest vacancy was in Pacoima - Sun Valley (3.9%).

West Los Angeles, the third largest area, includes Palms-Mar Vista-Marina del Rey (35,000 units, 4.8% vacancy - the lowest in the area), West LA - Century City - Rancho Park (30,000 units, 5.3% vacancy), Westwood (15,000 units, 6.6% vacancy), Venice (13,000 units, 9.1% vacancy) and Westchester-Playa del Rey (12,000 units, 7.7% vacancy).

The Harbor Area, includes San Pedro (14,000 units, 4.4% vacancy), Wilmington-Harbor City (10,000 units, 3.0% vacancy) and Torrance-Gardena (7,000 units, 4.8% vacancy).

Our conclusions? Higher priced markets (Venice, Playa del Rey, Westwood) are suffering the highest vacancies as landlords fail to drop their rents sufficiently to attract and retain the new breed of thrifty tenant. More moderately priced areas (Palms-Mar Vista on Westside, for example) are recording low vacancy rates.

Vacancy rates are likely to peak in 2010 and gradually decline in 2011 as the pipeline of new dwelling units declines and as fiscally-stricken Angelenos begin to work again, and move off their roommate's couch or out of their childhood bedroom.

Data comes the Department of Water and Power and its records on individually metered apartments. We consider this the best reflection of the market, although it does not cover records from the cities of Santa Monica, Beverly Hills, West Hollywood, etc.

Harper West Hollywood Unveiled - 32 Stellar Condos Almost Ready to Make Their Mark in West Hollywood

Construction fencing is down at Harper West Hollywood @ 1250 N Harper Avenue, a big, bold new complex in the heart of West Hollywood.

Updated July 8, 2010:  Adner Realty Group is pleased to announce that we will be doing the social media and online marketing for Harper West Hollywood.  Please check out the Harper West Hollywood Blog and the main Harper West Hollywood website.  Even better, come check out the project and see it for yourself!  Units start at $499,000.

Updated August 26, 2010: Prices have been reduced an average of 12% -- 1 bedrooms starting at $499,000, 2 bedrooms starting in the low $600,000s.  With interest rates at historic lows, and many, many excellent floorplans to choose from, opportunity knocks!  Check out the new pricing by clicking here.

We've had a chance to tour the units, and the end-product exceeds the high expectations that we had last August when we wrote about the complex. This is a maverick new construction and historical preservation project with 40 residential units:

• 24 condos -- new construction (left, in photo above)
  
• 8 condo units -- new construction, preserving facade of previous building (center, in photo above)
  
• 8 rental units -- renovation of 2 existing Spanish fourplexes (in photo below)
  

Where this project gets really interesting is the unit mix, and buyers will have lots of unique floorplans to choose from. The left tower has 5 stories and 24 units:

• 6 penthouse units of 1,788 - 1,932 sq ft -- floors 4 and 5. All are 2 br, 2 bath (except one 3 br, 2 bath).
  
• 8 "crossover" duplex units of 1,286 - 1,326 sq ft -- floors 2 and 3 -- two-floor units with entrances on the 2nd floor. 4 units have entrance on the north side, 4 units have entry on south side. All 1 br, 1.5 bath.
  
• 10 "flats" on a single level of 1,260 - 1,518 sq ft -- on floors 1, 2 and 3. Some are 1 br, 1.5 bath, others are 2 br, 1.5 bath.
  

The rear building with the Spanish facade has 4 stories and 8 units:

• 3 penthouse duplex units of 1,451 - 1,484 sq ft -- on floors 3 and 4. All are 1 br, 2 bath.
  
• 3 two-level duplex units of 1,455 - 1,527 sq ft -- on floors 2 and 3. All are 1 br, 2 bath.
  
• 2 garden-level "flats" of 1,679 - 1,799 sq ft -- on floor 1. Both are 2 br, 2 bath.
  

Balconies and incredible views abound (as do boatloads of high-end finishes.) And did we mention the 81 parking spaces?

Harper West Hollywood
1250 N Harper Avenue
West Hollywood, CA  90046
email: sales@harperwesthollywood.com
tel: 323-848-8211

Hacienda Lofts @ 1137 Hacienda Place, West Hollywood: 8 Units by Barney's Beanery and Palihouse (and IHOP for Breakfast)

The Hacienda Lofts at 1137 Hacienda Place in West Hollywood offers 8 units designed in a contemporary, minimalist style that will appeal to many buyers. There are two smaller units (1,304 sq ft) priced at $595,000 and six larger units (1,530 - 1,665 sq ft.) priced $749,000 - $795,000. This amounts to $450 - $520/sq ft.

Units come with two tandem parking spaces and HOA are about $320 (on the low end for the area). The building has unique, multi-level floorplans that surround a courtyard.

The kitchen area is merged with the living area. Range/oven and refrigerator are Kitchenaid. Flooring is wide-plank, light-colored wood and concrete.

The building has views north to the Hills and south the the Flats. Rooms are light and bright.

Bathrooms have Duravit fixtures, wooden cabinetry, and finishes on par with comparable projects in the area.

Master baths come with tubs.

There are many micro-neighborhoods in West Hollywood, and residents at the Hacienda Lofts will appreciate the proximity to some of the local businesses, eateries, watering holes, and hotels.

Just down the street, the legendary (and notorious) Barney's Beanery, the final stop on famous Route 66, has been serving beer and chow for generations. Steps away, Palihouse, an intimate hotel-long-term residence-restaurant-bar-social scene, recently opened its doors. And the Mondrian (Sky Bar) is just up and Sunset. And did we mention there's an IHOP right near you, too?!?

Hacienda Lofts
1137 Hacienda Place
West Hollywood, CA 90069

Sold by deasy / penner& partners

Westside Los Angeles Home Market Bottomed in December 2008 - Median Sale Price Trends Down 15% to $1.7 Million

We checked in on the Westside Los Angeles neighborhoods of Bel Air - Holmby Hills, Beverly Hills, Beverly Hills Post Office, Brentwood, Pacific Palisades, Santa Monica and Westwood - Century City to see how sales and prices are trending. This is some of the most sought-after real estate on the West Coast (and perhaps the world) - how has real estate fared during the tumultuous past couple of years?

Quite well, all things considered. The percentage of homes under contract in the over-$2 million sector reached a low during the midst of the financial crisis during the Winter 2008 - 9 and has been on the upswing ever since.

The market of under-$2 million homes has been showing robust signs of recovery. The percentage of homes under contract in this sector bottomed out during the same winter 2008 - 9 period and is now far exceeding sales levels of two years ago. 2010 is shaping up much more like the 'good old days' of 2007 rather than the 'dark days' of 2008 - 2009.

The improvement in sales may partially be attributed to the decline in median price of Westside homes. The median sale price in Bel Air - Holmby Hills, Beverly Hills, Beverly Hills Post Office, Brentwood, Pacific Palisades, Santa Monica and Westwood - Century City has declined about 15% since its high of two years ago. Median sale price has trended down from $2.0 million in April 2008 to $1.7 million in April 2010.

Anyone looking for "fire sale" prices or a collapsed market better look elsewhere. Westside Los Angeles is sprinting to a very nice housing recovery.