Glendale multifamily prices are only going up
GLENDALE, CA—A private investor has sold the Adams Street Apartments in Glendale for nearly $2 million over the list price in a 15-buyer bidding war. The property is located in a great location and has a value-add component and rental upside, which helped to attract strong buyer interest. However, with prices hitting their peak in more primary L.A. markets, we may be seeing more and more investors heading to the tri-cities market this year.
“I am seeing a lot of buyers, whether institutional or private, starting to look at Glendale, Pasadena and Burbank as a market that has a lot of upside in rents,” David Leibowitz, VP at Investment Real Estate Associates, tells GlobeSt.com. “I think you are going to see some leveling off in general with the Fed raising the interest rate, and there is going to be an impetus to have the market somewhat stabilize. But, even with interest rates starting to go up, which could stabilize the market, there are a lot of eyes looking at potential for rent growth in these areas as far greater than comparable locations. I think that 2016 is going to be a very strong year.” Leibowitz represented the buyer and the seller in the transaction, along with EVP Chris Thompson.
The property traded hands for $21.1 million, and came to market with a $19.4 million list price. Right away, the sales team received an aggressive above-market offer, and the prices continued to escalate from there. “We exposed this fully to our buyer pool and on the Internet, and there was a tremendous amount of interest for this property,” adds Leibowitz. “The property has a value-add component, low rents and a fantastic unit mix. We got an all-cash, non-contingent offer right away that was over the asking price. There were a handful of offers that really wanted the deal, and it just became a bidding war. We made it through a couple of rounds, and went to a best and final round and all of those offers were above the asking price.”
For sellers, the heightened demand in the tri-cities market is great news. This particular seller was motivated to sell because of the market conditions and traded into high-yielding multifamily assets out of state. “The seller was looking to take advantage of the market in Glendale right now. His motivation was to increase his cash flow into higher yielding assets,” says Leibowitz, adding that this has been a growing trend in the market. “A lot of people right now have been moving capital out of the market. I have been doing a lot of deals in the San Fernando Valley, especially in the tri-cities area, and we are seeing a lot of sellers take advantage of the compressed cap rates right now, whether it be out of state or into a higher yielding property class. They are really trying to take advantage of the potential increase in cash flow. I have a client that after 25 years of owning a multifamily property in North Hollywood, is finally ready to list his property for the exact same reason. There is a lot of that happening in this environment.”
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