During the pandemic, South Bay has become one of the most attractive markets for developers and investors.
In 2021, 333 multi-family properties sold on the market, compared to 198 the previous year, according to data from CBRE Group Inc.
Also in 2021, 26 office buildings changed hands, compared to 21 the previous year.
Industrial sales, meanwhile, have remained relatively stable, but there is a lot of interest in properties.
The first-quarter vacancy rate was just 0.6%, down from 2.2% a year earlier, according to data from Jones Lang LaSalle Inc. Asking rents during the first quarter, meanwhile, were $1.62 on a triple net basis, up 57 cents. in a year.
Experts say the city’s location near ports, the beach, Los Angeles and Orange County has always spurred interest. But who is interested moves.
“In Long Beach, I recently represented tenants entering the market in new locations and some expansions. Because of Long Beach’s position with the ports, many port-related industries have always been there, but we’re also seeing new businesses take up space there,” said Quint Carroll, senior vice president of CBRE.
Carroll said that in addition to new businesses in the area, he is also seeing an increase in people wanting to live in the area.
Chris Benton, senior managing director of Newmark Group Inc., agreed that the area’s multifamily market was in high demand.
“Long Beach has a fantastic downtown, (it’s a) metropolitan city on the water, it’s the only downtown Los Angeles that’s on the water,” he said. “It’s a great place to live, work and play. There have been a lot of new developments there. The town is very development friendly and you can live in a nice new building for a significant discount on all the other coastal LA markets”
He said billions of dollars were now being invested in the region.
Anthony Muhlstein, managing director of Newmark who works with Benton, agreed that part of Long Beach’s appeal is its discounted price.
“We believe Long Beach and San Pedro are one of the last markets on the coast to create value where other markets are perfectly efficient,” he said.
Peter Yorck, managing director of JLL, said Long Beach has really seen increased interest over the past two years.
“What we’ve seen in Long Beach during Covid and over the past two years is increased migration to Long Beach from other parts of Los Angeles and other parts of Southern California,” a- he declared. “You had more rental demand for the apartment product and that translated into better rents and that led to more transactions.”
“Long Beach, downtown Long Beach is emerging,” Yorck added. “There are more food and drink options, more entertainment options, there are more new apartments in downtown Long Beach than there have been historically.”
Benton called Long Beach a “new kid on the block” compared to other areas of Los Angeles with lots of development, making it a great opportunity for investors now.
And all that interest has led to big sales in Long Beach, especially of multi-family assets.
The biggest sale so far this year in Long Beach, according to data from CoStar Group Inc., has been the Volta on Pine. Gelt Inc. purchased the 271-unit property at 635 Pine Ave. for $156 million.
Other major sales in the area include the 20-story Shoreline Square office building, which sold for $85.5 million; an industrial property at 5900 Cherry Ave. which sold for $51 million; 422 Residences, a 94-unit luxury multifamily property that sold for nearly $49 million; and a hotel sold for over $44 million.
Also this quarter, an office building called Congressional Place, which is slated for multi-family redevelopment, sold for $41 million.
This isn’t the only property indexed for multi-family redevelopment to sell recently.
At the end of last year, Onni Group of Cos. bought a mall slated for redevelopment for nearly $68 million, dubbed Marina Shores, at 6500 East Pacific Coast Highway.
Multi-family developments are in high demand in Long Beach, where many new developments are planned or have opened.
Recently, the highly anticipated Shoreline Gateway opened. The 35-story project is at 777 E. Ocean Blvd. and was developed by Ledcor Development and Anderson Pacific, in conjunction with partners Qualico Developments Inc. and Lantower Residential.
One of the biggest projects underway now comes from Waterford Property Co.
The company is working on the redevelopment of the 14-acre City Place Long Beach into Mosiac, a mixed-use property that will have 900 multi-family units, with New York-based partners Turnbridge Equities and Beverly Hills-based Monument Square Investment Group.
Waterford also owns the World Trade Center office asset and the Oceanaire multi-family building with partners.
Waterford co-founder Sean Rawson is a Long Beach resident and a big supporter of the area.
“We’re very strategic in choosing which markets we want to be in,” Rawson said. “It’s about understanding the demographics, what the economic drivers are, and getting a sense of the business environment in terms of working with a city. What drew us to Long Beach was that it’s the fifth or sixth largest city in the state, it’s located between two major economic powerhouses, MSA Los Angeles and MSA County Orange, and it is on the coast and next to the largest ports in the world.
The economic engines in place in Long Beach are significant and from a business perspective, the city of Long Beach is extremely conducive to business and development.
Rawson said that with the multi-family redevelopment, the company was seeking “the highest and best usage lenses” for the former City Place site.
Muhlstein added that Long Beach has seen 12% rental growth over the past year and the city has been “proactive” with development, sparking interest.
Benton, who was involved in the sale of Congressional Place and 6500 East Pacific Coast Highway, along with Muhlstein and other Newmark brokers, said there was “a pool of aggressive bidders” for projects with multi-family redevelopment potential. .
Benton said the town center site plan for development made the area desirable.
“Our development site marketing processes in Long Beach have been among the most competitive ever seen in the entire Los Angeles market,” Muhlstein said.
Yorck agreed he saw more multi-family redevelopment as well as base developments.
And experts say interest in Long Beach will only increase.
“I expect him to definitely continue to move in the right direction,” Carroll said. “It had good momentum before Covid…I expect the broader market to continue to trade in the right direction in both multifamily and office and industrial is already there with the port.”
Benton agreed, adding that the market has yet to see many new products open like some other markets have.
“With the rental growth that has occurred over the past 12 to 18 months, we are confident that investor demand will also remain strong for Long Beach and San Pedro,” he said. “We think there’s still quite a bit of lead for Long Beach and that’s easily seen by the institutional profile of the buyer we’re talking about in all of these deals…you have real institutional demand in Long Beach.”
Yorck said increased interest in the area could prompt more homeowners to sell to take advantage of strong demand and high prices.
The construction of more office space also makes the multi-family market more attractive.
And for Rawson’s Waterford, Long Beach will be an ongoing area of interest.
“We will always be interested in Long Beach,” Rawson said. “We’re such big stakeholders there and we’re really excited about the future of Long Beach. It’s not often you get a coastal town…that has the economic engines of Long Beach and also has an existing specific plan that provides development guidelines that have already been approved by the coastal commission.
“We intend to be a long-term player in the city,” he added.
Long Beach First Quarter Best Sellers
Volta on Pin
(635 Pine Avenue)
Gelt Inc., based in Tarzana.
purchased the property of 271 units.
Buyer: Gelt inc.
Seller: Holland partner group
and North America Sekisui House
Asset Type: Several families
Price: $156 million