LOS ANGELES—In 2016, there were a record number of multifamily deliveries in Downtown Los Angeles, with more than 2,600 units coming to market. The new supply, however, isn't detouring multifamily developers. Zion Enterprises and TA Partners recently purchased a 1.37-acre site in the downtown market to build a mixed-use multifamily property. Cimmarusti Holdings sold the site for an undisclosed amount.
The sale really highlights the consistent demand for development sites in Los Angeles. “This sale underscores the fact that interest for multifamily development opportunities in Los Angeles remains strong. Especially with Ballot Measure JJJ passing in the November 2016 election, which has rendered many otherwise suitable sites in Los Angeles no longer feasible for multifamily development,” Laurie Lustig-Bower, EVP at CBRE, tells GlobeSt.com. Lustig-Bower and her colleague Kamran Paydar represented the seller in the transaction.
The market is absorbing the housing supply that has been delivered, and rents are continuing to climb. “The demand for multifamily rental units in Los Angeles continues to support healthy occupancies,” Paydar tells GlobeSt.com. “Buyers studied our rent survey and the submarket development pipeline. While other districts within Downtown LA are seeing relatively more construction, this location, between Chinatown and the Grand Avenue Civic buildings and performing arts venues, does not have the same scale of new deliveries to directly compete with.”
This dynamic helped to drive interest in this site, and the brokerage team had offers from both international and domestic investors and different capital sources. “Prospective developers' sources of equity capital included institutional equity, private/domestic investment funds, and offshore capital,” says Lustig-Bower. “Developers recognized the unique opportunity to acquire this property, which is located in an up-and-coming area of Downtown Los Angeles.”
While the high demand and dearth of supply were enough to entice developers to this sale, there has been some acrimony in Los Angeles lately between residents and developers. The conflict has led to anti-development measures coming to the ballot and they have been enough to detour some developers. However, that was not the case for this site. “No Measure S concerns as the site is zoned by right for multifamily mixed-use development,” says Paydar. “Following our marketing campaign, the escrow period was over two years, thus the Measure S push was not a consideration. The extended escrow timeline enabled the buyer to finalize entitlements prior to closing, well ahead of the March 2017 election.”
The site is located at Grand Avenue and Cesar Chavez Avenue, and is entitled for a 22-story, 299-unit multifamily tower with 8,000 square feet of ground-floor retail. At present, there is a fast-food chain on the land site.
LOS ANGELES—In 2016, there were a record number of multifamily deliveries in Downtown Los Angeles, with more than 2,600 units coming to market. The new supply, however, isn't detouring multifamily developers. Zion Enterprises and TA Partners recently purchased a 1.37-acre site in the downtown market to build a mixed-use multifamily property. Cimmarusti Holdings sold the site for an undisclosed amount.
The sale really highlights the consistent demand for development sites in Los Angeles. “This sale underscores the fact that interest for multifamily development opportunities in Los Angeles remains strong. Especially with Ballot Measure JJJ passing in the November 2016 election, which has rendered many otherwise suitable sites in Los Angeles no longer feasible for multifamily development,” Laurie Lustig-Bower, EVP at CBRE, tells GlobeSt.com. Lustig-Bower and her colleague Kamran Paydar represented the seller in the transaction.
The market is absorbing the housing supply that has been delivered, and rents are continuing to climb. “The demand for multifamily rental units in Los Angeles continues to support healthy occupancies,” Paydar tells GlobeSt.com. “Buyers studied our rent survey and the submarket development pipeline. While other districts within Downtown LA are seeing relatively more construction, this location, between Chinatown and the Grand Avenue Civic buildings and performing arts venues, does not have the same scale of new deliveries to directly compete with.”
This dynamic helped to drive interest in this site, and the brokerage team had offers from both international and domestic investors and different capital sources. “Prospective developers' sources of equity capital included institutional equity, private/domestic investment funds, and offshore capital,” says Lustig-Bower. “Developers recognized the unique opportunity to acquire this property, which is located in an up-and-coming area of Downtown Los Angeles.”
While the high demand and dearth of supply were enough to entice developers to this sale, there has been some acrimony in Los Angeles lately between residents and developers. The conflict has led to anti-development measures coming to the ballot and they have been enough to detour some developers. However, that was not the case for this site. “No Measure S concerns as the site is zoned by right for multifamily mixed-use development,” says Paydar. “Following our marketing campaign, the escrow period was over two years, thus the Measure S push was not a consideration. The extended escrow timeline enabled the buyer to finalize entitlements prior to closing, well ahead of the March 2017 election.”
The site is located at Grand Avenue and Cesar Chavez Avenue, and is entitled for a 22-story, 299-unit multifamily tower with 8,000 square feet of ground-floor retail. At present, there is a fast-food chain on the land site.
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