August was a slow month for multifamily sales, at least on the top end of completed sales.
The five largest multifamily sales of the month totaled $81.3 million, less than a third of the $297 million in July and less than the $118 million total in June.
None of the top sales in August registered above $30 million. The sales only reflect activity at the high end of the market, but could be indicative of a larger slowdown in activity.
Commercial brokers attributed the falloff in sales to higher interest rates and uncertainty over the outcome of a November ballot initiative that would roll back measures that limit rent-control.
Oscar Diaz, an associate at Marcus & Millichap, said he’s seen a general slowing that he pins on uncertainty over the outcome of Proposition 10, which, if passed, would repeal the Costa-Hawkins Rental Housing Act of 1995, opening units across the state to rent caps.
“Our business is cold calling hundreds of owners a week and what we’ve been hearing is they’re just waiting to see where Costa Hawkins will go,” Diaz said. And with higher interest rates, “owners now are concerned about the future market value of their properties.”
Brian Shaffer, a principal and managing director at George Smith Partners, told The Real Deal that sellers have been unwilling to reduce prices, “so we have seen a standoff, which has impacted the multifamily investment sales market.”
The August figures were compiled from property records by PropertyShark.
1. Las Palmas Villa Apartments — Xenon Investment Corp | $28.05M
A West Los Angeles investment company made the biggest purchase of the month when it bought this four-story complex. The property is an 81-unit building close to Route 101 and built in 1984. The sale was made through Hollywood Lofts LLC, represented by Deepak Mehta, the owner of Xenon Investment.
2. 427 N. Palm Drive — Etco Homes | $23.3M
The second largest sale of the month was an all-Beverly Hills deal. Both buyer Ecto Homes and seller K Pacific Development LLC are headquartered there, and the 12-unit property itself is on the eastern edge of the tony city. The two-story building was constructed in 1941. Etco is a developer, so it could have plans to replace the building with something larger in the future.
3. 1313-14 Ocean Drive — Robert and Elizabeth Schoenben | $11.5M
Beachfront properties in L.A. don’t have to be big to sell for hefty sums. This Manhattan Beach property has three units and is just 2,600-square-feet, but the Pacific Ocean is less than 200 feet from the front door. The seller was a trustee of the John C. Lyon Trust.
4. 621 N. Cerritos Avenue — Golden Link Investment LLC | $10.9 million
Golden Link Investment’s August purchase is in Azusa, near the San Gabriel Mountains, far from the sandy beaches of Manhattan Beach. Where it lacks in access to the Pacific it gains in units. This low-rise has 26 units and was built in 1962. It got a major renovation in 2004. Golden Link is connected to a Alhambra firm called LAA Investment, Inc. and is run by Xiao Bing Cheng.
5. Four Gables — Four Gables Apartments LLC | $7.6 million
This historic apartment building was designed by Leland Bryant and opened in 1927. The stately, castle-like building has 16 units, in which some notable tenants have lived before, including actresses Winona Ryder and Sherry Stringfield. The seller was Manhattan Beach-based Mark M. Gallon.