Glendale’s Multifamily Moment

The pandemic has only exacerbated Glendale’s long-suffering office sector, but the multifamily market has provided several big-money deals in recent months.Most notably, Next on Lex, a 494-unit multifamily property, sold last month for $290 million.The site, which also includes roughly 8,000 square feet of ground-floor retail, was purchased by California Community Housing Agency from owner Cypress Equity Investments.Located at 275 W. Lexington Drive, the property, which was 92 percent leased at the time of the off-market sale according to CoStar Group, is a modern apartment complex built in 2019 by Century West Partners.In addition to Next on Lex, California Community Housing Agency recently purchased the Brio in Glendale for $110 million.The property, at 546 W. Colorado St., features 205 units that were built in 2013. Sequoia Equities Inc. sold the complex to CCHA, a 2019-established state agency with Catalyst Housing Group serving as asset manager for the agency.

The new owner’s focus is to repurpose these market rate luxury apartments into workforce housing.“We are excited to take this step and increase housing opportunities for middle-income households. As a mayor and advocate for affordable housing, I am looking forward to seeing this approach take shape in Glendale,” City Councilmember Vrej Agajanian, who served as mayor at the time, said in a statement.Mayor Paula Devine added in a statement that rent has outpaced income in Glendale and this phenomenon has been hitting low-income and middle-income households hard.“This model emphasizes good, practical ideas to help protect a part of our existing population who cannot afford rent, but do not qualify for assistance,” Devine said in a statement.Public-private dealsPartnerships between real estate entities and government agencies seem to be proliferating in Glendale, where Waterford Property Co., a diversified real estate investment and development firm, in a joint venture with California Statewide Communities Development Authority, announced last month that it would acquire a 507-unit luxury multifamily community called Altana at 633 N. Central Ave. for $300 million.The intent is similar to that of the California Community Housing Agency with Next on Lex and Brio as this transaction represents the largest community to date to be acquired as part of CSCDA’s middle income housing program.  The entity is a joint powers authority founded by the League of California Cities and the California State Association of Counties in 1988 to enable local government and eligible private entities access to low-cost, tax-exempt financing for projects that provide a tangible public benefit, contribute to social and economic growth and improve the overall quality of life in California.  The authority is comprised of more than 530 cities, counties and special districts, and has issued more than $65 billion through 1,700 plus transactions.   Using tax exempt bond financing, the authority can acquire multifamily projects without the use of public subsidies to provide housing for the middle-income workforce demographic.

Once their ownership is sealed, Waterford and the authority will be able to immediately lower rents for qualified new residents making between 80 to 120 percent of the area median income. Tenants who qualify in this median income range can participate in the program during lease renewals.Built in 2017, Altana features more than an acre of private open space, rooftop pools, landscaped garden and yoga room.Office slumpIn a sign of the state of the local office market, at the end of last month, CBRE Group announced that COVID-impacted WeWork gave up the floors it occupied at 611 N. Brand Blvd.

Longtime office broker William Boyd at Kidder Mathews said that vacancy continues to climb in Glendale year over year while occupancy has gone down and a true picture of Glendale’s office market won’t really be clear until three or four years from now, after leases currently in play have expired.Indeed, a glance at Colliers International’s first-quarter data bears that out, with Glendale vacancy exceeding 20 percent from an already high 15.1 percent the year before. Net absorption for the quarter was negative 63,854 square feet. The drop has been precipitous: a year before, it was in the positive at 145,500 square feet.