AvalonBay Buys Site Entitled for 175 Units

LOS ANGELES-AvalonBay Communities Inc. has acquired a development site of approximately 1.7-acres at the southwest corner of Second and Los Angeles streets in Little Tokyo that is entitled for a 175-unit multifamily project called Matsu. Michael Murphy of the Costa Mesa office of Chicago-based Moran & Co., which brokered the sale, tells GlobeSt.com that the property attracted strong interest from prospective buyers because of its location, in-place entitlements and other factors that made it appealing both to for-sale developers and to apartment investors.

"The entitlements were a big factor," Murphy comments. "With the entitlements in place, this was a property that an investor or developer could just plug into their development pipeline right away."

Murphy and Scott Davis of Moran & Co. represented the seller of the development site, K. Hovnanian Homes of Red Bank, NJ. According to Murphy, Matsu represented "a unique opportunity to purchase a multifamily development site in the heart of the Little Tokyo District."

Murphy points out that another advantage of the site is that it is in an established neighborhood of residents, shops, restaurants and other amenities. It is also in a part of Downtown Los Angeles where very little development is in the pipeline.

AvalonBay expects to begin construction at the site in early 2008. Chris Payne, vice president of development for the Alexandria, VA-based REIT, says that the location fits the company's strategy of developing luxury apartments in markets like Southern California where barriers to entry are high.

Payne points out that Matsu is part of a masterplanned development known as Block 8 that will add additional retail, rental and for-sale housing to the neighborhood. The six-story Matsu apartments building will also feature 8,500 sf ground-floor retail space along Los Angeles Street.