Sign of Suburban Demand: Los Angeles Apartments Sell After Luring Almost 100 Offers

Renters Drawn to Units Not Near Crowded City Core During Coronavirus

By Jacquelyn Ryan  |  CoStar News

Raintree Partners bought a portfolio that includes the 137-unit Canyon Drive Manor in Hollywood, California. (CoStar)

A local family that owned five suburban apartment complexes for decades has almost 100 reasons to show why rentals outside city centers are popular in the pandemic. In short, that's how many offers the sale generated.
 
Raintree Partners bought the properties in greater Los Angeles for $142 million after a bidding war for the portfolio that underscores spiking demand for rentals in less crowded suburbs.
 
The real estate investment company based in Dana Point, California, bought the properties in Camarillo, Canoga Park, Glendale and Hollywood from a local family that has owned them for an average of 34 years, according to CBRE Group, which brokered the deal.
 
Strong apartment demand has helped offset some of the worst effects of the COVID-19 pandemic on Los Angeles real estate, CBRE's Dean Zander, who represented the seller, told CoStar News. Apartments in L.A. suburbs such as Glendale in the San Gabriel Valley and Camarillo in Ventura County 50 miles northwest of downtown show better financial performance than properties in some of L.A.'s densely populated and expensive neighborhoods.
 
"The pandemic is having a ripple effect on both the office and multifamily markets because people just aren't inclined now to go into central business districts to live, work and play," Zander said. "People used to define quality of life as access to entertainment, nightlife and jobs in the urban core. We've seen a switch now to larger garden-style units, away from luxury high-rises. It's much more about the need for space, distance and quality of life now, and suburban areas are really benefiting more than ever before."

The properties received the almost 100 offers to buy either the whole portfolio or individual properties before selling to Raintree for an average cost per unit of about $257,713, CBRE said. That's well below the Los Angeles average asking price of $372,000 a unit, according to CoStar.
 
The sale and accompanying bidding war reflects the growing popularity of multifamily properties outside of urban metropolitan centers as renters seek more space and less expensive units on the outskirts of major cities during the pandemic, Zander said.

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