Monday, September 24, 2012

Westside Multifamily September 2012 - Buildings selling at 12.3 - 15.9 GRM - Buyer Interest Intense - Sellers Welcome Market Demand After 5 Year Drought

The demand for Westside apartment buildings is strong.  Any half-decent building in any half-decent Westside location is met with keen buyer interest and frequently multiple offers.

Fueling this trend is (1) lack of inventory (2) hoards of cash that has been sidelined during years of economic malaise (3) dramatically increasing rents (4) ultralow interest rates (5) a plethora of buyers doing 1031 Exchanges and (6) confidence that it's safe to move into real estate (specifically multifamily) investment market after five years of price declines.

The result?  A bonanza for Sellers looking to cash out of their investments, and frustration from Buyers who must hurl ever higher offers in order to claim these scarce Westside multifamily assets. (Adner Realty Group recently listed a 7 unit apartment building in the Ocean Park neighborhood of Santa Monica and experienced this demand firsthand.)

Our conclusion?  Westside GRMs range from 12.3 - 15.9.  That's a wide range, but the Westside market encompasses a wide range of building vintages (typically mid 1950's to present) and wide variability of influence of rent control (some buildings encumbered with rents far below market, others that are non-rent controlled.)

Let's take a look at six Westside buildings that have sold in the past three months to see how buildings are trading.

Santa Monica - 1544 9th Street - $2,623,000 - 13.5 GRM - $417/sq ft - 8 units - This building has eight 2 br + 1 ba units, and is comprised of 6,290 sq ft.  Constructed in 1999, the building has five non-rent controlled units and three affordable housing units.  Units have central AC, balconies, lofts and many upgrades. This building is located north of Colorado Avenue and near the intersection of Lincoln.

Santa Monica - 1537 Stanford Street - $2,250,000 - 14.3 GRM - $269/sq ft - 7 units - The 1965 building is comprised of four 2 br + 2 ba units and 3 bedroom 2 br + 1.5 ba units over 8,349 sq ft.  Upgrades include granite countertops, designer kitchens and bathrooms with porcelain tile.  Rents are approx. 25% below market.  One appeal of this property is the size of the units, which average almost 1,200 sq ft.  Building is located approx. 2.5 miles down Colorado Avenue from the beach.

Santa Monica - 508 Hill Street - $2,110,000 - 15.9 GRM - $267/sq ft - 6 units - This building includes three 3 br + 2 ba units and three 2 br + 2 ba units over 6,731 sq ft.  Rents of three units are significantly below market.  This, combined with the large br / ba count for units has contributed to the exceptionally high GRM of this building.  1962 building is located near 5th Street and Ocean Park Blvd in the Ocean Park neighborhood of Santa Monica.

West LA - 1745 Colby Avenue - $2,150,000 - 13.4 GRM - $285/sq ft - 10 units - This building is comprised of one 4 br + 2 ba, two 2 br + 2 ba, six 1 br + 1 ba and one studio.  Total building square footage is 7,540 sq ft.  1962 building is located near Barrington and Santa Monica Blvd.

Palms - Mar Vista - 3992 Inglewood Boulevard - $7,250,000 - 12.3 GRM - $331/sq ft - 21 units - This building was completed in 2012 and illustrates current values for a non-rent controlled Westside building in the city of Los Angeles.   Unit mix consists of thirteen 2 br + 1 ba, six loft + 1 ba, one 1 br + 1 ba, one studio.  At 23,225 sq ft total, building is renting at $2.12/sq ft.  New buildings of this size and price range rarely come to market.  Located near Centinela and Washington Blvd.

Westwood - Century City - 10438 Santa Monica Boulevard - $1,730,000 - 12.4 GRM - $369/sq ft - 10 units - Building is comprised of one 2 br + 1 ba unit, seven 1 br + 1 ba units, and two studios.  Units average a cozy 513 sq ft/unit.  Although the location just west of Century City is excellent, the fact that this building is on busy Santa Monica Blvd makes this building less desirable.