From DTLA to Marina Del Rey, Los Angeles has a micro-market for every demographic, and it is a big draw for institutional investors.
BY KELSI MAREE BORLAND
Los Angeles is rapidly growing, but it is also evolving into a city unlike any other. While every city is segmented by neighborhoods, Los Angeles sprawl is giving way to a series of micro markets across the city that serve specific target demographics. As a result, institutional investors—a capital source that has started to target Los Angeles in recent years—is looking for opportunities in these markets.
“I think that what is different, especially being a native Angeleno, is that L.A. has developed into micro markets,” Dean Zander, EVP at CBRE, tells GlobeSt.com when asked how Los Angeles has evolved over the years. “Locally, there are all of these micro markets within L.A. that are getting a lot of attention and a lot of funding to grow. They are getting their own individuality.”
While markets like Downtown Los Angeles, which is undergoing a dramatic renaissance, get a lot of headlines, Zander points to several L.A. markets that are growing and getting investor attention. “Downtown Los Angeles continues to grow and expand, and it is now attracting world class restaurants, hotels and retailers. At the same time, other markets are also growing,” he says. “We are seeing the Warner Center Specific plan being unveiled with thousands of units, hotels and office towers. NoHo has come into its own and has become very edgy and urban, and it is an exciting place to live. Then the Marina del Rey and Playa del Rey area have been completely redeveloped.”
These markets all have their own character and unique atmosphere, but they also attract attention from specific renter demographics, like millennials and baby boomers. “The target renter demographic are attracted to these different areas for a variety of reasons, and I think that there is continued growth that we are going to enjoy,” adds Zander.
These demographic groups are growing, and helping to fuel growth in these markets and extending the runway for the Los Angeles market in general. “Between the home affordability index and the millennial and senior populations growing, I think that we have a very strong runway ahead of us for continued growth,” Zander explains. “It has been a long cycle, and history tells us that we are in a cyclical business, I don’t think that we are nearing the end or late in the game.”
San Diego-based Logan Capital Advisors acquired a two-property apartment portfolio for $33 million in Colton, CA from Los Angeles-based TruAmerica. The assets include Reche Ridge, a 110-unit apartment complex, and 1333 Canyon, a 104-unit apartment home property. The buildings are located at 2270 Cahuilla St. and 1333 Reche Canyon.
Berkadia’s Jim Fisher and Mike Smith, along with Dean Zander, who subsequently joined CBRE from Berkadia, represented the seller. CBRE also arranged the interest-only debt for the buyer as part of a 1031-exchange.
Zander says, “The increasing demand for housing and manufacturing in this area make multifamily a wise investment. The Inland Empire has really benefitted from the influx of people and jobs driven by all the industrial and e-commerce growth, and is generally considered an affordable alternative to many other Southern California regions.”