This gain is despite 421 new units delivered to the market.
And the effective monthly rent per unit was $ 1,716, also the highest in the period on record, up more than $ 100 from levels before the 2019 pandemic.
“This year, around the spring, trading volume returned to more normal levels after taking a hiatus in 2020 during the height of the pandemic,” said Jack Levis, vice president of CBRE Group Inc. “The number vacancies are down, and with that comes the growth in rents, (which are) all signs of a healthy market in Long Beach ”
Lévis added that in recent years, the city has experienced “exceptional growth in rents. Rents are below the LA average across LA County as a whole, but there have been great opportunities as rents have increased year on year for investors to find value.
One of the developers who took note is Waterford Property Co., based in Newport Beach. In 2021, the company made two major acquisitions in the region: the 14-acre City Place Long Beach with New York-based Turnbridge Equities, and Beverly Hills-based Monument Square Investment Group, which it plans to turn into a mixed-use development; and the 216-unit Oceanaire with the California Statewide Communities Development Authority, which will be housing the workforce.
Waterford now has over 500 multi-family units in the city.
“Since we founded our business in 2015, we have been extremely active in Long Beach,” said Sean Rawson, Founder of Waterford and resident of Long Beach. “What we love about Long Beach is that starting from the top, there is great leadership, political leadership… (is) pro-economic development. They put in place policies that make it very favorable to investment and economic development. On top of that, its location between downtown Los Angeles, West LA, and Orange County – (and) you have many long-term growth drivers such as ports, coastal proximity for tourism and the fact that it’s easily switchable to jobs at all of these job bases – makes it a great place to live.
In December, a mall intended for redevelopment into a multi-family property at 6500 E. Pacific Coast Highway sold for $ 68 million. Onni Group of Cos. purchased the 6.2 acre site. Kevin Shannon, Bill Bauman, Ken White, Chris Benton and Anthony Muhlstein of Newmark represented the seller and buyer in the transaction.
Benton said many investors are now interested in Long Beach as rents rise and the product that has come online in recent years has been well absorbed by the market. Its discount to other areas in the LA area is also a draw.
“Quality of life is a big factor here,” Benton said. “You get more for your money in Long Beach. ”
And Lévis added that all the construction underway was a huge advantage for the market.
“There are new constructions and changes in use, and a lot of money is being invested in the city,” he said. “It attracts higher (employees), a different type of tenant, and there is a runoff to other buildings, all other categories of buildings. Investors are happy that there is a lot of investment and development.
Rawson called Long Beach “the last major coastal city that still has great potential for development. Much of the southern California coast is built and not zoned for development. “
He said he wanted to continue doing land development and buying existing properties in the area.
Lévis said he expects rents to continue rising in 2022 and to see more development. Despite the number of large projects in the region, he added that it was still a small percentage of the overall supply, which means the market is not oversized.
Robert Stepp, director of Stepp Commercial, said that while Long Beach has garnered a lot of interest, state regulations could be a concern going forward.
“We see interest for sure,” he said. “It’s dropped about 20% in terms of interest in properties because of everything going on with the state and tighter homeowner rules and regulations. However, we are still seeing interest and a new pool of buyers is coming. “
He added that about 30% of properties traded now come from the same six or seven investors.
“There is a group of buyers who take a long-term view,” Stepp said.
Still, he said he expects prices to cool and rents to stabilize.
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