Multifamily Transactions Show Significant Decline

A report from Hanes Investment Realty Inc. details a dramatic slowdown in multifamily transactions and double digit declines in some measures of the pricing of these properties in the first quarter. The Westlake Village based brokerage company looked at data from the San Fernando Valley as well as other areas of Los Angeles. In the first quarter of the year, the number of transactions in the Valley plummeted by 72 percent for rent controlled properties and 56 percent for non-rent-controlled properties, according to Braemon M. Hanes and Bryan B. Hanes, authors of the report. Properties traded at gross rent multipliers that were more than 12 percent below the levels for the same period last year for rent controlled properties. Non-rent controlled properties trade at 12.86 percent below the levels for the same period in 2006. Gross rent multipliers or GRMs reflect the sale price of a property divided by the gross rent. At the same time, cap rates, another commonly used formula that compares sale prices to rental income, increased in the area to an average of 5.30 percent in the first quarter for rent controlled properties, up 6.43 percent from the year ago period, and up 5.63 percent to 5.17 percent for non-rent controlled properties. On a full year comparison, multifamily property transactions fell by 50 percent in Toluca Lake, 34 percent in Burbank, 43 percent in Glendale, 29 percent in North Hollywood and 25 percent in Sherman Oaks. Less severe declines were seen in Northridge, where transaction volume declined 7 percent, Valley Village with a 9 percent decline, Panorama City with an 11 percent decline, and Studio City where transactions declined 16 percent. The report also noted that vacancies have remained exceedingly low in most Valley neighborhoods in the second quarter of 2007. With the exception of Woodland Hills, most communities are experiencing apartment vacancy rates between 2.8 percent and 3.8 percent. In Woodland Hills, however, the vacancy rates were 11.2 percent in the second quarter of the year. Woodland Hills Sale A 53,378-square-foot office building in Woodland Hills has been sold for about $12 million. The property, a flexible office building located on three acres of land at 6041 Variel Ave., is leased to Activision for use by one of its subsidiaries. Gary DiMartino, a partner with TOLD Partners Inc., represented the buyer, Selective Real Estate Investments. Sylmar Multifamily Sale An 81-unit multifamily building in Sylmar has been sold for $11,150,000. Trion Properties acquired the property, at 13490-13520 Foothill Boulevard. Jesse Stamps, a broker with Marcus & Millichap, represented the seller, Kardan Family Trust. The buyer was represented by Marcus & Millichap’s Rick Raymundo. Calabasas Office Sale Park Granada Center, a 40,000-square-foot office property in Calabasas, was sold to a private investment group for $11 million or $275 per square foot. The property consists of three office buildings at 4764, 4766 and 4768 Park Granada. Jeff Albee and Chris Itule, brokers with Sperry Van Ness in Woodland Hills, represented the seller, Graham Trust in Thousand Oaks. The buyer was represented by Robert Stratton of Stratton Commercial. Delivery Set for Conejo Buildings Telair Wendy Road LLC, is set to deliver the first of seven office buildings under construction in Conejo Valley in September. The buildings are located at Wendy Drive and Old Conejo Road in Newbury Park. The development consists of 31 buildings ranging from 2,700 square feet to 15,000 square feet. They are priced from $1.5 million to $6.8 million, although they can also be leased. The properties are being marketed by Tony Principe, president of Westcord Commercial Real Estate Services. Warner Center Deal Newport Sportswear LLC has leased 15,466 square feet of office space in Woodland Hills. The company will locate in a single-tenant property at 6001 DeSoto Ave. The five-year deal was valued at $2.2 million. Mark Leonard, a principal at Lee & Associates LA North/Ventura Inc., represented the landlord, Schaub Properties LLC. The tenant was represented by Bennett Robinson at CB Richard Ellis. Hotel Sector Softens The median price of hotel properties dipped 8 percent over the past 12 months in the Los Angeles market, according to a report just released by Marcus & Millichap. The decline refers to the Los Angeles metro area. However, Marcus & Millichap noted that the region remains one of the country’s most active markets. Marcus & Millichap attributed the median price decline to fewer upper-tier property transactions. Senior Reporter Shelly Garcia can be reached at (818) 316-3123 or by e-mail at [email protected] .