There Is Nowhere the Multifamily Boom Hasn't Hit

LOS ANGELES—The multifamily boom isn't exclusive to uber urban markets. Single-family residential neighborhoods are seeing high demand for multifamily, too. The Waterstone Apartment Homes in the single-family market of Chatsworth recently traded hands for $72.5 million between two unnamed institutional buyers.

“Chatsworth has a very solid job base and transit access, and it is a good value. People recognize that the asset has strong fundamentals, Greg Harris, executive director at Institutional Property Advisors, tells GlobeSt.com. “This is also a large value-add deal in a market where you don't see a lot of that product trading.” Harris represented both the buyer and seller in the transaction, along with Ron Harris, IPA executive director, Kevin Green and Joseph Grabiec, IPA senior directors, and Paul Darrow, IPA director.

Waterstone Apartment Homes is a 348-unit apartment complex and one of few large value-add opportunities in the market. As a result, it attracted significant interest from both institutional as well as private buyers, something that brokers have seen more frequently. “What was interesting about this particular transaction, and it is very similar to what we are seeing across a lot of our more recent large apartment marketing efforts, is that we got a great cross section of both institutional and private investors looking at the deal,” says Harris. “Everything that we have sold in the last six to 12 months has seen significant interest from the private buyer pool, even in the $100 million price range.”

The buyer plans to renovate the interior and exterior units of the property, and expects to see a significant upside in rents. The property currently has an average $1,375 rental rates, and the buyer expects to get $1,700 to $1,800 post renovation. There is no information on the investor's specific plans or the capital investment.

The multifamily market has been highly active with a clear trend toward rentership. Part of that trend is the result of baby boomers and millennials wanting to live in urban cores; however, multifamily activity in markets like Chatsworth is the result of an affordability gap. “This is an affordable option for people. There is a trend toward rentership and part of that is because there is a huge affordability gap,” says Harris. “The investor thesis on these deals is that you can buy these apartments, renovate them and the post renovation rents are still at a significant discount to homeownership. The group that ended up buying it felt like it was worth a significant investment in the property because they have a tenant base that will still get a great value even after the property is at luxury status.”

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

LOS ANGELES—The multifamily boom isn't exclusive to uber urban markets. Single-family residential neighborhoods are seeing high demand for multifamily, too. The Waterstone Apartment Homes in the single-family market of Chatsworth recently traded hands for $72.5 million between two unnamed institutional buyers.

“Chatsworth has a very solid job base and transit access, and it is a good value. People recognize that the asset has strong fundamentals, Greg Harris, executive director at Institutional Property Advisors, tells GlobeSt.com. “This is also a large value-add deal in a market where you don't see a lot of that product trading.” Harris represented both the buyer and seller in the transaction, along with Ron Harris, IPA executive director, Kevin Green and Joseph Grabiec, IPA senior directors, and Paul Darrow, IPA director.

Waterstone Apartment Homes is a 348-unit apartment complex and one of few large value-add opportunities in the market. As a result, it attracted significant interest from both institutional as well as private buyers, something that brokers have seen more frequently. “What was interesting about this particular transaction, and it is very similar to what we are seeing across a lot of our more recent large apartment marketing efforts, is that we got a great cross section of both institutional and private investors looking at the deal,” says Harris. “Everything that we have sold in the last six to 12 months has seen significant interest from the private buyer pool, even in the $100 million price range.”

The buyer plans to renovate the interior and exterior units of the property, and expects to see a significant upside in rents. The property currently has an average $1,375 rental rates, and the buyer expects to get $1,700 to $1,800 post renovation. There is no information on the investor's specific plans or the capital investment.

The multifamily market has been highly active with a clear trend toward rentership. Part of that trend is the result of baby boomers and millennials wanting to live in urban cores; however, multifamily activity in markets like Chatsworth is the result of an affordability gap. “This is an affordable option for people. There is a trend toward rentership and part of that is because there is a huge affordability gap,” says Harris. “The investor thesis on these deals is that you can buy these apartments, renovate them and the post renovation rents are still at a significant discount to homeownership. The group that ended up buying it felt like it was worth a significant investment in the property because they have a tenant base that will still get a great value even after the property is at luxury status.”

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.