Will USC Village Revitalize the Submarket?

LOS ANGELES—The USC Village center under construction near USC could be the catalyst for some major growth in the submarket. Local expert Robert Ip, an associate at Avison Young, likens the development to the relationship between the Staples Center and downtown. The area has already seen some major growth, with increasing multifamily transaction volumes and prices. Ip, in fact, recently represented the buyer the purchase of the Palisades Apartments, a 28-unit apartment complex near USC, for $12.6 million at a 5.1% cap rate. To find out how the market is evolving and how the USC Village development might help boost it even further, we sat down with Ip for an exclusive interview.  

GlobeSt.com: You have completed a couple apartment property sales near USC – what is the market like there?

Robert Ip: The market around USC has been quite active in the past year. Prices have been increasing and so has the number of transactions. A reason some owners are choosing to sell can be attributed to uncertainty surrounding the new 15-acre USC Village development. However, many real estate developers have placed confidence in the area's enhanced quality of life that will then create a heightened demand for even more needed retail, residential, and other amenities. Developments like the upscale student housing community, the Lorenzo, are testimony to that confidence. The market continues to be a strong place for investment, especially when taking into account the amount of money USC is spending to bolster the surrounding community. 

Finally, the rents achieved through student housing are second to none in the USC area – and they continue to climb. With rents being as high as they are, students and their parents expect a quality product that offers well-maintained and well-managed assets; on-site amenities; and nearby amenities that make for a more convenient and well-rounded student experience.

GlobeSt.com: How do you think the USC Village development will change the apartment property market?

Ip: Similar to the positive economic impact resulting from the development of Downtown LA's Staples Center and LA Live, I think the USC Village development will certainly bring more value and positive change to the submarket. USC Village is planned to house 2,700 students, as well as offer other student amenities including an exciting mix of retailers like Trader Joe's. As evidenced by the surrounding submarket's low residential vacancy rate, the new student-housing product will help satisfy pent up demand for rental housing throughout the area.

GlobeSt.com: What are owner advantages for student housing assets?

Ip: Student housing is truly a unique subset of the apartment sector. Because of a campus-close location, the demand is high and rents can often be pushed higher than comparable non-college adjacent product. Another advantage is that the majority of the time, there is more than one guarantor per unit, which offers more assurance for the landlord that the contract will be honored. Lastly, the standard student-housing lease is transitioning to a longer minimum term of 12 months in many properties.  Students have overwhelmingly accepted this shift in lease term due to the tightness of the market. Overall, student-housing investors enjoy a stable asset and favorable cash flow.

GlobeSt.com: As a professional with a few years of brokerage experience, what strategy has helped you close deals?

Ip: It is important to be a trusted advisor and to always act in the client's best interest. If I wouldn't make an investment in an asset personally, I wouldn't recommend it to my client. The same philosophy goes for a disposition. Once trust is earned, brokers cannot only gain a client for life, they can also reap the benefit of new business through word-of-mouth referrals.    

GlobeSt.com: What advice would you give other young people looking to get a start in brokerage?

Ip: The first piece of advice that I would give someone looking to get a start in the business is to find an experienced broker that is willing to mentor you. Inevitably, a new broker will encounter challenging situations. Leveraging a mentor's experience gives the mentee a safety net and peace of mind, while allowing for opportunities in growth. Secondly, it is very important to be consultative in nature when interacting with your clients. This shows that you are genuinely listening to their needs and requirements, which at the end of the day will make you a better broker.