Can Glendale Absorb Its Growing Housing Supply?

Apartment demand in Glendale is seemingly insatiable. The apartment supply has grown by 10% in recent years, and yet, both absorption and rent growth remain strong. Now, the largest project yet is delivering in phases through the end of the year to test the demand. So far, demand is continuing to outpace the new supply. Next on Lex, from developer Century West Partners, is a 494-unit apartment property with 8,100 square feet of ground floor retail space in Downtown Glendale. The first phase of the project delivered this summer and is already 60% leased. Phase two delivers in November and the final buildings deliver in early 2019.

“We delivered phase I this summer, and it is already 60% leased. In a new building you usually get a lot of early leasing activity. We are scrambling to get building B done in November or we will run out of units. The final phases will delivered early 2019. The staggered deliveries help. There is only one other building in lease-up in Glendale, and the occupancy is extraordinarily high. Everyone is in the 90% range,” Kevin Farrell, EVP and COO at Century West Partners, tells GlobeSt.com. Farrell says that not only has leasing activity been strong, but the firm is meeting pro forma rents that included rent growth for this year.

Century West Partners has been a pioneer and leader in emerging markets like Koreatown, bringing the first luxury apartment development to the market. It saw similar growth characteristics in Glendale, but admits that it is arriving late to the market. “This is an unusual story for us. Usually when we enter a market, we are an early adopter in a location, like in Koreatown,” says Farrell. “In Glendale, the city did a specific plan that allowed a number of sites to be developed as luxury housing. We are late to the party, but we have one of the best sites because it is so centrally located in Glendale. Not only did a lot of residential housing beat us to the market, but even more importantly, the Americana at Brand has been there with a great shopping experience. The housing that has been built has turned a nine-to-five street into a 24-7 street.”

As a result of this strong demand, there has been significant new apartment development in Glendale—a city that boasts one of the largest new construction pipelines in the Greater Los Angeles area. “That made us raise the bar in terms of the product that we are putting out there,” explains Farrell. “We were able to incorporate the best of all of our projects into Next on Lex with better finishes, better appliance packages and better connectivity. That is huge for our tenant profile. The Internet connectivity speed is a huge issue, and we will be the best in the market. We think we are delivering better product to our renters than anyone else in the market, partially because we are deeper in the cycle and we have learned a lot.”

The project is not only the largest in Glendale, but it is also the largest apartment development currently under construction in Los Angeles. Century West built the project in multiple buildings and included a public park to break-up the space and create a site that would serve the community as well as residents. “Because this is such a large site, it didn’t make sense to put a big box on it. We divided the project into separate building, and we divided the buildings with a permanent public paseo, and it is activated with a coffee shop,” says Farrell. “There are a lot of office buildings that don’t have a green space or a place to have lunch. We think this is an amenity for our residents and the people in the three-block radius near the building.”