Second-Quarter Activity Citywide and Countywide Was Well Below 2021 and 2022 Measurements
By Ryan Patap
CoStar Analytics
July 15, 2024 | 9:33 AM
Hampered by high debt costs and by recent transfer tax legislation in the cities of Los Angeles and Santa Monica, multifamily sales activity in Greater Los Angeles remains listless.
In the second quarter of 2024, multifamily sales within Los Angeles city limits clocked around $630 million in properties traded. While the figure sits above the $556 million in sales measured in the first quarter of 2024 and the most in over a year, activity was still only around 40% of the average quarterly levels seen in 2021 and 2022, the sector's most recent period for peak activity.
The largest second-quarter sale in the city of Los Angeles closed in April, when the San Francisco investment manager DivCore acquired the 214-unit Reveal Playa Vista from New York-headquartered developed Clarion Partners for $122.1 million, or $570,000 per unit. At the time of sale, the property was 93% leased, and in-place income equated to a 4.3% cap rate. The deed recorded with the sale showed Clarion paid just under $7.4 million in transfer taxes.
The remainder of Los Angeles County saw $526 million in transactions in the second quarter. While up from the first quarter’s $421 million in transactions, activity was around one-third of quarterly average levels in 2021 and 2022.
The largest sale outside of Los Angeles proper closed in June in Santa Monica. The locally based Trojan Buildings purchased Princess Eugenia Apartments, a 27-unit property, as part of a 1031 exchange for $16.9 million, or $626,000 per unit. A 1031 exchange allows sale participants to avoid capital gains taxes by trading properties. Because the apartments sold for more than $8 million, the transaction was subject to a 5.71% transfer tax of just under $965,000.
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