Long Beach, a Hotspot for Value-Add Investment

Long Beach is becoming an attractive value-add investment market, slowly but surely. Canyon Partners Real Estate and CIT have partnered to acquire Fountain View Apartments, a 153-unit apartment complex in Long Beach, through Canyon Multifamily Impact Fund III. Long Beach has seen a surge in economic activity over the last decade, and the market is poised for more growth.

“Over the past ten years, Long Beach has experienced a surge of new economic activity with a significant amount of private and public capital being invested in major development and expansion projects,” Robin Potts, co-head of real estate investments and director of acquisitions at Canyon Partners Real Estate, tells GlobeSt.com. “In addition to the $4.5 billion Port of Long Beach modernization project and Long Beach Civic Center redevelopment, there are over thirty large construction projects currently in the pipeline bringing a significant amount of new employment opportunities and lifestyle amenities to the city.”

While the market has experienced economic growth, it hasn’t been a magnet for investment activity. The economy is largely driven by public sector, manufacturing and trade based employers, according to Potts, and the employees of those industries has a need for moderately priced, workforce housing. “We feel these dynamics fit well with the Canyon Multifamily Impact Fund’s initiative to enhance multifamily properties located in low and moderate income communities within strong growth markets by preserving affordability for the majority of units and instituting social impact initiatives along with long-term capital improvements,” adds Potts.

Fountain View Apartments fits into that investment strategy perfectly. The fund will enhance the property through capital improvements as well as through social improvements. This will include resident programs, like education, healthcare and community initiatives, which Potts says are “designed to benefit both residents and the communities in which they live and work.” It will also continue to invest in in the Long Beach market for similar opportunities. “We think Long Beach’s rapidly growing and diversifying economy combined with its relatively affordable rent levels compared to other high-priced markets in Los Angeles bode well for continued real estate investment within our Canyon Multifamily Impact Fund platform,” says Potts.

Like all Southern California markets, this acquisition was competitive and highly sought after by a wide range of capital sources. Canyon invests throughout Southern California. “While we are seeing some minor cap rate expansion in certain Southern California submarkets, the market more broadly continues to draw strong buyer demand from core/value-add institutions as well as generational family offices as investors are attracted to the strong fundamentals driven by markets with high barriers to entry, dearth of new supply, and desirable lifestyle amenities and employment,” says Potts. “We continue to find attractive opportunities to invest across our platforms.”