SoCal Apt Sales
Picking Up Steam
LOS ANGELES—“No deals are being done”
was one of the constant refrains in the
not-too-distant past, when hardly any
properties were trading and commercial
real estate brokers said that sales prices
were hard to establish, in large part
because of that lack of deals. Lately, however, REITS, institutional buyers and
others who trade stabilized core assets
appear to have figured out how to establish values because the pace of deals has
picked up noticeably, especially in
Southern California’s multifamily sector.
Sometimes the REITs and institutions
are buyers, sometimes they are sellers,
but in both cases, they know what they
are looking for.
In one of the most recent deals, for
example, Irvine, CA-based Western
National Group acquired the 403-unit
Charter Apartments at 2750 Kelvin Ave.,
also in Irvine, from the State Teachers
Retirement System of Ohio. The buyer
acquired the property through its
Western National Realty Fund II LP in a
transaction that was brokered for the
seller by executive managing director
Marc Renard of the Cushman &
Wakefield capital markets group, along
with Ed Rosen and John Chu of the
San Diego office.
Renard says that the sale “demon-
strates the appetite among investors for
core assets in strong markets.” He points
out that the Charter property generated
18 offers from bidders that included
public REITS, operating groups, high-
net worth individuals and others. One
reason the asset generated so much
interest is that it is exactly what institu-
tional investors and REITs are looking
for these days. Renard calls it “a very
high-profile property in a high-profile
In addition, the property had added
appeal in the Orange County market,
where it’s very rare that assets of this size
and quality trade. According to Renard,
that’s because those who own multifam-
ily assets that are of a substantial size and
high-quality want to hold onto them,
especially the Irvine Co., which currently
owns the majority of such assets in the
SEATTLE—Colliers International has
recruited Scott Coombs as its regional
managing director of Northwest operations. Based here, Coombs will oversee
management, recruitment and business
development in the firm’s offices throughout Washington, Oregon, Utah and Idaho.
SANTA ANA, CA—Grubb & Ellis Co. has
added Robert Bell, a 32-year veteran of
the appraisal industry, to its Landauer
Appraisal & Valuation operation as
senior managing director, California.
ANAHEIM, CA—Voit Real Estate Services has
tapped David Fults as a senior vice president in its Los Angeles
Central office. Fults,
who formerly served as
first vice president of
CB Richard Ellis, will
continue his 12-year
partnership with Brian
vice president of Voit’s
Los Angeles office. ◆
For more executive moves, please visit
Hopeful Signs for CA Builders
The swoon in home sales that hit California and the rest of the nation in July caused housing markets to tumble and fears among builders to climb. Why this is the case remains a
mystery, since this was one of the least surprising “surprises” in the news recently.
After real estate bubbles burst, there is usually a lengthy period—two to three
years—when the market sits on the bottom, with weak sales and a slow pace of building, before it starts to climb. This is understandable: there is a large decline in available home equity that could be used for trading up to a nicer property; the market is
typically over-supplied with units built during the boom; fewer people are moving for
jobs in a weak labor market; and, all in all, so many people bought
homes during the bubble that many families are simply content to
stay put. Baseline demand needs time to recharge.
Despite these formidable
hurdles, the Obama
small burst in market activity early in the year. Builders began to buy back land they
had sold just a year or more ago at huge discounts. But when these programs had
run their course, the false demand faded and the market logically sagged back to
the bottom, where it will continue to sit for some time.
Still, some data sources indicate that builders should actually be growing more,
rather than less, confident. The state has not built enough housing to keep up with
population growth for well over a decade. Indeed, in the midst of the boom, the
pace of sales was only slightly greater than the demand for housing.
Because of this, builders in the state are more likely to see rising demand for
their products than in other bubble states such as Arizona, Florida or Nevada.
Indeed, this has recently come to light in data from another source—rental vacancies. The major markets in the state have seen substantial declines in rental vacancies from the not-very-high peaks hit last year. Los Angeles, for example, has seen
vacancies drop from 7.3% to 6.6%. However, the number of for-sale units has
remained relatively steady.
The margins won’t be as nice—but at least revenues will start flowing again, and
some of those workers who found themselves out of a construction job in 2007 may
actually find themselves earning a paycheck yet again.
By Christopher Thornberg
Christopher Thornberg is an economist and founding principal of Beacon Economics in Los Angeles.
He may be contacted at email@example.com. The views expressed here are the author’s own.