Socal Multiunit Real Estate

SANTA MONICA RENT CONTROL GRIPE

SANTA MONICA RENT CONTROL GRIPE

It is astounding how local, state and federal governments hold landlords responsible for so many things.

After a brief meeting and credit check a landlord is expected to take on the liabilities of a virtual stranger, and then be held responsible because that tenant is an Illegal aliens, smokes, has pets, trims a neighbor’s tree, has a bad temper…

Our city’s Rent Control board do their best to make multiunit ownership undesirable Santa Monica, CA.

As an incorporated city, Santa Monica has created their own special set of rules, which can be a deterrent to unseasoned property investment owners and developers. 

This week’s grumble, instead following the City of L.A. example and allowing landlords to raise rent 4% every year, the City of Santa Monica devises an annual General Rent Adjustment….which seldom if ever equals the annual cost of living increase. For example, this year’s proposed General Rent Adjustment is 2.7% .

MULTIFAMILY WIZARDS OFFER INSITE INTO HOUSING’S FUTURE

MULTIFAMILY WIZARDS OFFER INSITE INTO HOUSING’S FUTURE

Key players in the multifamily industry offered insight on the  strengths and challenges multifamily housing market in the next few years at the Multifamily Trends Conference portion of the Pacific Coast Builders Conference, held recently in San Francisco. The Multifamily Trends Conference offered an opportunity to collaborate with the best and brightest thinkers in the multifamily industry; a forum for experts and practitioners to dialogue on emerging trends in designing, developing, financing, marketing and managing the next generation of for-rent and for-sale multifamily housing.

    Professional opinions were optimistic:    

• Camden Property Trust CEO Ric Campo noted that “multifamily is a great place to be…Underlying fundamentals are good, and as a result of foreclosures on the single-family side, we are seeing an increase in the renter pool from 30.9 [percent] to 32.2 percent. That’s 1.5 million new renters looking for an apartment…some of the forecasting indicates that by 2011 we might even be facing rental shortages. The next several years are going to be a time of great opportunity but in a market…”   

• Chip Conley, founder and CEO of boutique hotel chain Joie De Vivre, advised to continue to leverage the opportunities of the Internet, which “has created a promiscuous customer that changes product with the click of a mouse.” When it comes to tenant concessions, “add value rather than dropping prices,” Conley advised. “Instead of cash discounts, offer to throw a $5,000 move-in party, or provide a $1,000 gift card to Best Buy for a resident to outfit their apartment with the latest technology. Instead of creating a better transaction, create a memory.” 

•  The overall feeling was that operational efficiencies as the key to bottom-line success. “Be a revenue rat,” Stellar Management CEO Robert Rosania suggested. “The revenue rats of 2008 will become the bulls of 2009 and slaughter the pigs of 2010. The burden to execute now is 100 percent.” 

• Bob Gardner, managing director of consulting firm RCLCO, noted that there are very little economic surprises in multifamily. While condo prices have plummeted nationally on average by 40 percent, the apartment market has enjoyed a different ride, as vacancies drop and effective rents rise. Gardner paid much heed to the Gen Y set, citing U.S. Census numbers that indicated 82 percent of the under-25 set will be more likely to rent than to buy housing. The largest segment of Gen Y will be graduating from college in 2009, Gardner noted, and the best Gen Y market will fall between then and 2013, when this set is first likely to begin exiting rentals for home ownership. Regardless, Gardner saw a propensity toward higher density, urban lifestyle living across all age demographics. “Multifamily is a product type that is now a lifestyle product of choice, and that holds for the long term,” he concluded.  

       Get all the glorious dirt @

• http://www.pcbc.com/multifamily/

• http://www.multifamilyexecutive.com/industry-news.asp?sectionID=565&articleID=728855

SOBRATO DEVELPMENT COS. EXCHANGES FOR CONDO PROJECT IN SEATTLE + REPOSITIONS EXPO62 AS LUXURY APARMENTS

A brief introduction…John Albert Sobrato is #131 on Forbes 2006 list of the 400 Richest Americans + #382 on the list of the world’s billionaires.

Now that we have your attention, the self made real estate developer + founder of Sobrato Development Companies, with a net worth $2.4 billion.    In a bold move, Sobrato Dev. Cos. has purchased Expo62, a 114-unit Seattle condominium development by Seattle-based Intracorp Real Estate LLC.

Repositioning the building in the marketplace, Sobrato Dev. Co. will market the former condo project as a luxury apartment complex.

Sobrato Dev. Co. adds Expo62 to their portfolio of 9.5 million square feet of commercial space, 8,000 residential units; another 340 acres ready for development. The recent strategy of the Cupertino, CA-based company has been to sell off San Jose properties, and reinvesting in apartments in Washington State, Oregon, other parts of California.

Expo62 was acquired in a 1031 exchange quietly in February from Seattle-based Intracorp Real Estate LLC for $48 million, which translates to $421,000 per unit and $475 per sf. As part of the deal, Intracorp will deliver the completed construction project to Sobrato by the end of July.

Brian Cox, a VP with Sobrato told GlobeSt.com that while Sobrato didn’t overpay for the asset it did pay a premium for a unique property. “This was an opportunity to buy a very high quality product with beautiful views that probably would never have been built as apartments. This was also an opportunity to invest in Seattle, where job creation has been very good and where we are looking very long term.”

 “You wouldn’t spend $48 million to build a 114-unit apartment complex in that location, it’s unique,” observes transaction broker Jeffrey Williams, of Moran & Co.

The marketing materials associated with the sale estimate that the property can achieve rents of $2.50 per sf. If the development had been stabilized at that rate, Williams says a $50-million purchase price would have translated to a capitalization rate somewhere in the mid 4% range.

Former Palo Alto residential broker developed Silicon Valley commercial real estate 1960s with partner Carl Berg (see). Later built up portfolio erecting campuses for tech titans Apple Computer and Yahoo. Having built an impressive real estate dynasty in the Northwest, Sobrato has become noted philanthropist in the Bay Area. Together with his family, he has created the Sobrato Family Foundation.

  Sources: http://www.globest.com/news/1184_1184/seattle/171755-1.html ; http://www.forbes.com/lists/2006/10/T3BG.html ; http://www.sobrato.com ; http://en.wikipedia.org/wiki/John_A._Sobrato;

UPGRADE YOUR BUILDINGS + GET A REBATE

UPGRADE YOUR BUILDINGS + GET A REBATE Southern California property owners (and property managers) of existing residential multifamily complexes with two or more dwelling units may qualify for rebates from Southern California Gas Company (Sempra). The rebates are for upgrades such as high-efficiency dishwashers, attic insulation, wall insulation, and natural gas storage water heaters. Rebates are available on a first-come, first-served basis until December 31, or until funds are depleted. To qualify, energy-efficient products must have been purchased and installed on or after January 1, 2006, and applications postmarked by December 31, 2008. The amount and availability of rebates may change during the year. Contact the Multifamily Rebate Program Info Line Program at (800) 427-4400.