Essex Property Trust REIT Unloads L.A. Multifamily Site for $60M
The 115-unit property in Glendale was sold to Ron Nasch of Fairmont Management
The multifamily market in Los Angeles County — already faced with a notoriously long affordability crisis — is floundering amid the chaos of 2020. But one major California-based REIT just found that demand remains for quality product.
Essex Property Trust sold a 115-unit property in Glendale to Ron Nasch, president of Fairmont Management, for $60 million. Walker & Dunlop announced the sale and represented both parties in the transaction.
The Glendale submarket has seen just six institutional multifamily sales since 2009, according to Hunter Combs, managing director with Walker & Dunlop. The property was originally built in 2009 as for-sale condominiums at 416 East Broadway, between Kenwood and Jackson streets. Combs told Commercial Observer that Essex bought the vacant property and converted the uses of the units to for-rent.
Rents range between $2,551 to $3,130 per month on Realtor.com. The units average about 1,100 square feet, and the property includes retail and dining space, as well as a fitness center.
“Although Glendale has seen an increase in multifamily inventory of about 11 percent since 2010, it has been able to consistently achieve occupancy rates north of 96 percent, as well as meaningful rent growth,” Combs said in a statement.
Investors favor the tri-cities of L.A. County — Burbank, Glendale and Pasadena — which have historically strong multifamily markets. But the coronavirus outbreak will take its toll, as it’s predicted rents will decline by 10 to 12 percent in the county, including in the tri-cities, accounting to Lee & Associates’ third quarter multifamily report.
The region east of the San Fernando Valley saw average asking rents at $2,028 in the third quarter, with a 5.4 percent vacancy rate, which rose by about 1.5 percentage points since the third quarter of 2019.
The overall L.A. County market is suffering from a lack of affordable housing, and problems have been exacerbated by pandemic-driven unemployment and economic shutdowns. A couple months ago, the University of California, Los Angeles (UCLA) and the University of Southern California (USC) reported that tens of thousands of households did not pay rent at least once between May and July, and more than one-fifth of all renters in the county paid rent late at least once between April and July.
Essex Property Trust has also been working on a large, 440-unit apartment complex in Downtown L.A., and has been active, most recently, in submarkets like the San Fernando Valley and Hollywood, as well as other regions in Southern California.
The Walker & Dunlop team on the Glendale trade included Combs and Blake Rogers.