Middle Market Digest: This Week in Southwest
Here’s a look at this week's trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.
BY THE NUMBERS
LOS ANGELES—Industrial rents in Southern California have increased 14.1% year over year for the second quarter of the year. The Inland Empire market saw the biggest increase in rent growth, up 24% year-over-year. Los Angeles followed with a 9% increase in industrial rents followed by Orange County with a 7.5% increase and Ventura with 1.6% gain in rental rates.
(SOURCE: NAI CAPITAL)
LOS ANGELES—The absorption rate of apartment product in Los Angeles has increased, offsetting the impact of new construction supply coming onto the market. Developers are slated to complete 8,950 units in the next three quarters of the year, and more than half of these rentals are in the Downtown Los Angeles region, and more than 2,600 apartments in Mid-Wilshire, where a host of six- and seven-story properties are brought to market. Outside this area, core downtown, the Tri-Cities submarket and the Westside Cities region each welcome more than 1,500 new rentals in 2018. In Downtown Los Angeles, vacancy rates fell to 4.7% in the second quarter with rents up 3.9%. Overall, Los Angeles has a multifamily vacancy rate of 4% with apartment rents up 6.3% for the quarter.
(SOURCE: MARCUS & MILLICHAP)
NEW & NOTABLE
TEMPE—Ben Perrone has joined Sundt Construction, Inc. as a project director for the company’s building group, southwest district. In his new role, Perrone will guide a process that strategically blends design and construction, enabling collaborations between project partners to build environments where clients, employee-owners and communities prosper. In his prior positions, Perrone has played a key role leading award-winning project teams, designing a variety of private and public buildings with firms in Boulder, Colo., Chicago and Phoenix. He has demonstrated a rigorous attitude towards design, innovative building technologies and high-quality solutions using utmost efficiency in his prior projects. He offered leadership in providing exceptional service and outstanding management of project assembly with a cooperative, pragmatic approach.
IRVINE, CA—The Southern California office of Duke Realty Corp. has hired Michael C. Chukwueke as VP of Development. In his position, Chukwueke will be responsible for identifying, analyzing and securing new development opportunities in the market. Chukwueke has his MBA in Finance and Entrepreneurship from Argyros School of Business at Chapman University and his Bachelor of Science Degree in Business Administration from Pepperdine University. He has received supplemental instruction in negotiations from the London School of Economics’ MBA program and completed Harvard Business School’s Master of Business Administration Executive Certificate Program in Strategic Financial Analysis. He joins the firm from Rockefeller Group as a development manager and for TIAA-CREF as an assistant portfolio manager and as an asset management analyst.
DEALTRACKER
COACHELLA, CA— George Smith Partners has arranged $32.4 million in financing for the ground-up development of a 250-room, 35-acre, casitas-style resort hotel flagged by an IHG Hotel Indigo in Coachella, California on behalf of the developer Glenroy Coachella. Steve Bram, Principal/Co-Founder of George Smith Partners, worked with SVP David R. Pascale, Jr. and assistant VP Huber Bongolan, Jr. to arrange a $24.4 million senior construction loan and $8.0 million PACE funding for the hotel, the first new construction hotel project ever financed by PACE in California. This hotel will be the closest hotel to the Empire Polo Club, the site of many famous Music Festivals held annually attracting some of the world’s most talented and diverse artists. It is also perfectly located to capture business from regional tennis, golf, film and other corporate events.
PHOENIX—A state-of-the-art, build-to-suit facility in Phoenix that is fully leased to Banner Health has traded hands between Ryan Companies and Inland Real Estate Acquisitions LLC. Located at 4375 E. Irma Ln. in Phoenix, the Banner Health building totals 29,350 square feet of class-A medical office space built in 2018. It is situated near the corner of Tatum Boulevard and the Loop 101, with direct visibility from the Loop 101 freeway and close proximity to State Route 51 and Interstate 17. It also sits in the desirable Desert Ridge community, featuring high-end residential neighborhoods and a mix of premier office, retail, restaurant and entertainment developments.
SAN DIEGO—CBRE Capital Markets’ Debt & Structured Finance team has arranged an $18.3 million loan for the acquisition of Avilla Heights, a luxury 116-unit apartment complex in Chandler, Arizona. Brian Cruz, Scott Peterson, and Bill Chiles of CBRE’s San Diego office secured the interest only, fixed rate loan through Fannie Mae, on behalf of The Certé Group, LLC, which is based out of San Diego. Avilla at Chandler Heights, is located at 255 East Chandler Heights Road, and was constructed in 2017 and consists of 116 single-story units, featuring private backyards in 101 individual buildings. All two and three-bedroom units are stand-alone buildings and the one-bedroom units are in duplex configurations. This complex is located on 9.52 acres (approximately 12-units per acre) and offers common amenities such as a swimming pool, spa, central greenbelt, fully gated access, and covered parking.
LOS ANGELES—A 90,000 square-foot hospital in Los Angeles’ Chinatown has traded hands to a medical group, for $33 million. The buyer plans to renovate the building into an urgent care facility. CBRE’s Bradford McCarthy represented the seller, the French Society, in the transaction. Allied Pacific IPA represented itself. Located at 531 West College Street in the heart of Chinatown, the property is 2.5 acres and currently holds a hospital. Allied Pacific, an HMO that contracts with major health plans, physicians, hospitals, and local healthcare providers, plans to revamp the existing structure.
LOS ANGELES—A retail property occupied by discount grocer Smart & Final in Highland, CA traded hands for $9.475 million to an unidentified private buyer from Los Angeles. Located at 27550 Base Line Street in Southern California’s Inland Empire, the newly built property opened to the public in December of 2017. The new storefront offers fresh meat and produce, along with a wide-variety of packaged goods. It is strategically situated at a signalized intersection just west of Interstate 210. The building is within proximity of other retailers and amenities, including a Starbucks, CVS Pharmacy, an ARCO gas station, and additional food retail. The transaction was arranged by Matt LoPiccolo, formerly of Marcus & Millichap, who joined CBRE in May of this year. LoPiccolo and Marcus & Millichap’s John Glass represented the seller, Smart & Final, which will continue to lease the space –in the purchase of the lot.
LOS ANGELES—A 4.95-acre industrial site in Arcadia, CA, has traded hands to C.E.G. Construction, a local investor/developer, for $10.5 million. CBRE’s Anthony DeLorenzo, Mark Shaffer, Gary Stache, and Doug Mack represented the buyer, C.E.G. Construction. Located at 11621-11633 Clark Street, the site includes approximately 31,400 square feet of office and industrial space across four multi-tenant buildings and three acres of paved and secured yard area. The property has easy access to the 210, 605, and 10 freeways and sits in a dense infill market in the San Gabriel Valley, a sub-region within Greater Los Angeles, the most sought-after investment market in the country. The CBRE team also represented the seller, Grey Light LLC, in the transaction.
BUILDING BLOCKS
SAN DIEGO—D.K. Realty Holdings and Pathfinder Partners are nearing completion on Paseo Village Townhomes in Ramona. Located in the heart of rapidly growing Ramona in northeast San Diego County, the new, 31-unit, nine-building luxury development is at Day and La Brea streets. Pathfinder acquired the 2.5-acre parcel – complete with approved architectural plans in late 2016. The remaining units in the community will be completed this fall. Paseo Village’s three-bedroom, two-and-a-half-bath, Craftsman-style homes, each with a two-car, direct-access garage, are 1,577 to 1,632 square feet. Prices start in the 400,000s.
SANTA MONICA—KFA has begun construction on The Curve @ West Angeles Senior Apartments, located near the intersection of Crenshaw Boulevard and 54th Street. The development is a project of the West Angeles Community Development Corporation and Related Companies of California. The 52,777 square-foot, five-story building consists of a total of 70 apartments, with 40 low-income units, 29 very-low-income units, and 1 market rate manager’s unit. The development is conveniently located just two blocks north of the Crenshaw/Slauson Station in Park Mesa Heights, which is currently under construction and slated for opening in 2019.
IRVINE, CA—R.D. Olson Construction has begun ground-up construction on Kings 838, a 37,000-square-foot luxury apartment complex located at 838 N. Kings Road in West Hollywood, California. The property is situated in the heart of West Hollywood near Melrose Ave. Shopping District, the Hollywood Improv Comedy Club and the MAK Center for Art and Architecture at the Schindler House. The four-story, multi-unit housing project will include 25 units with one and two-bedroom options as well as belowground parking. It also will feature myriad luxury amenities, including a car wash and pet wash station, fitness studio, yoga room and a third-floor deck with a pool and outdoor kitchen. The complex will also incorporate a theater designed to host movie premieres and live-streaming events of independent films and film festivals such as Sundance and Cannes.