Sean Burton Sam Burton is theCEO of CityView.

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Mid-rise apartment assets continue to see record pricing, andinvestor appetite is stronger than ever. DeveloperCityview has just sold two new constructionapartment assets, The Pearl in Los Angeles and Baker Block inOrange County for a total of $283 million. These deals illustratethe strong demand for well-located apartment deals with accessiblerents.

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"This exceeded our expectations," Sean Burton,CEO of Cityview, tells GlobeSt.com. "We knew the market was strong.We had a plan to sell these assets this year because we really likethe markets that they are in and we were happy with how theprojects turned out. Between the two assets we had 30 offers, and anumber of competitive offers from major institutions and high-networth individuals. We were really happy with how the sale turnedout."

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It wasn't only the strong pricing that is noteworthy, but thestrong interest as well. It shows that while pricing is at itspeak, investor demand has not yet waned. "We knew we would have alot of interest, but we didn't realize how much interest that wewould have," says Burton. "Part of it is the fact that there is notthat much product that is high quality and brand new in thesemarkets."

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Mid-rise product in particular is getting the most attentionfrom investors. "The overall rents are lower so you have a muchbroader renter pool," says Burton. "That is why this is ourbread-and-butter asset class. When you build mid-rise with greatamenities, there is a lot of appetite for it."

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As a result, Cityview is sharply focused on builing mid-riseassets in very specific submarkets. "People think the multifamilymarket is soft because there is a high vacancy in Downtown LosAngeles, but that is a small part of the market," says Burton. "Wehaven't built in that market because it is all luxury high-rise andit is oversupplied because of the new product. We picked Koreatownbecause it is the densest part of Los Angeles. It is mid-pointbetween all of the jobs being created in Hollywood and all of thejobs Downtown. We also built a product that rents could rent forless than $2,000 per month. When you have product like that, thereis a lot of demand, and investors understand the value of thoseproperties."

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Cityview plans to remain an active developer in this marketsegment thorugh the next year and beyond. "We are continuing tobuild the right product in these key markets," says Burton. "We areabout to break ground on a project in the Silver Lake/Echo Parkarea, and we are about the break ground on a project on Pico Blvd.near LACMA. We have a few other projects in the Bay Area as well.We are active, but we are trying to stick to our strategy ofbuilding mid-rise product near transit and near jobs. We are tryingvery had not to move to riskier product or secondary or tertiarymarkets where there is less stability in the long run."

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.