Western Real Estate Business

AUG 2018

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

Issue link: https://westernrealestatebusiness.epubxp.com/i/1012778

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Page 36 of 42

34 • August 2018 • Western Real Estate Business www.REBusinessOnline.com same family for many generations, ac- cording to Integrated Development, Wilshire Skyline's partner on the proj- ect. This gave the new development team a sense of responsibility to make these former owners proud. "Given the 45-year family history behind this site, it was critical to us that we build something special that future generations and our local com- munity would be proud of for years to come," says Alan Nissel, principal of Wilshire Skyline. That "something special" involved lofted residences with 16- to 20-foot ceiling heights (on some floors), cubed patios that transition seamlessly be- tween indoor and outdoor living, and views of Downtown, the Westside and the Hollywood Hills. SPF:architects designed the lobby and common ar- eas to be an extension of each resi- dence, with flexible and functional creative spaces dotted with furniture from a small-production designer out of Milan. Community amenities include the Sky Lounge, a penthouse-level lounge with double height ceilings and win- dows framing unobstructed views of the city; the Retreat, an indoor/ outdoor recreation center opening to the pool and spa deck, complete with a kitchen and lofted library; the Wellness Spot, a lobby-level gym; and ground-floor retail. Prospective residents can choose from a variety of furnishing packages, which come with turn-down and housekeeping services. "What is novel about this compre- hensive furnishing package is not only its design, but that its cost is largely borne by the Line Lofts rather than the resident, who is only expected to bring a toothbrush and some clothes," Nissel adds. Canyon Partners Real Estate is taking a similar approach by acquir- ing The Harvey, a 177-unit, mid-rise apartment community on Santa Mon- ica Boulevard for a reported $30 mil- lion. The company acquired the asset in June through Canyon Multifamily Impact Fund III LLC, a joint venture between Canyon and CIT Bank. CIT's Real Estate Finance provided a $20.4 million senior loan to fund the acqui- sition and capital improvements. Part of these improvements will include a rebranding effort. The as- set will be renamed The Derby Hol- lywood to reflect its historically rich Hollywood location, the neighbor- hood's history rooted in film and entertainment, and the celebrities de- picted in the building's famous mu- rals like Elvis and The Beatles. The funds will also be used to create out- door community space, re-envision 1,900 square feet of ground-floor re- tail and develop a variety of resident impact programs for this workforce housing project. There are more than 650,000 jobs within a five-mile radius of The Derby Hollywood, with no- table employers being Netflix, Para- mount Pictures, Kaiser Permanente, Children's Hospital Los Angeles, Cedars-Sinai Medical Center and Los Angeles City College. "Hollywood is in the midst of a development boom and as housing prices in Southern California con- tinue to rise, there is undeniable need for affordable workforce housing, particularly located in close proxim- ity to transportation, employment, education and healthcare," says Mike Pedone, CIT's managing director. "We are proud of our commitment, through CMIF III and Canyon, to help meet this need with our planned improvements to The Derby Holly- wood." In-Demand Stars Workforce and affordable housing options are in high demand in Hol- lywood, where rents increased 6.1 percent year-over-year in the second quarter of 2018, according to Marcus & Millichap's Los Angeles Multifam- ily Market Report. The report further cites Hollywood and nearby Kore- atown as the most active markets in Los Angeles in terms of absorption and construction. JLL notes in its recent snapshot that Los Angeles' median home value had increased 42 percent since 2008, from $427,400 to $674,600. Residents who are priced out of homeownership (and who choose to stay in the area) turn to renting, adding to Los Ange- les' historic low multifamily vacancy rate of 4.5 percent, down from 5.7 per- cent just a year ago. "Rising home prices has meant more people are unable to buy," notes Henry Gjestrum, JLL senior research analyst, in the snapshot. "The current home ownership rate is 51.9 percent, well below the U.S. average of 64.2 percent. All these factors are driving the demand for multifamily dwell- ings...To alleviate the shortage of rental units, developers have stepped into high gear with 33,000 multifam- ily units under construction. Given that living expenses are increasing more rapidly than wage growth and that home affordability continues to decrease, apartment fundamentals are likely to strengthen even more." This has inspired some companies, such as Micropolitan, a subsidiary of engineering firm Psomas, to create micro-units in some of the county's most sought-after areas. Micropoli- tan's projects include three iterations of The Micropolitan concept, which creates multifamily living experiences that cater to today's transit-oriented, walkable urban lifestyle. There are Micropolitans in Larch- mont Village, Miracle Mile and Fair- fax Village. The company is also leas- ing nVe, which features 82 micro-units in a seven-story North Hollywood building that sits adjacent to the Red and Orange Metro Lines and across from North Hollywood Park. Strategic Legacy Investment Group (SLIG) is another uber-active investor in and around the Hollywood scene. The Los Angeles-based private place- ment investment firm maintains a six- property multifamily portfolio valued at $65 million. Four of these assets are being developed in Hollywood within one mile of each other. "To me, overseeing four simulta- neous multifamily projects in Hol- lywood is not only a great honor but also a great responsibility," says Emanuel Sabet, SLIG's senior project manager. "With many new develop- ments in Hollywood...we felt it was important to deliver a product that MULTIFAMILY TAKES A STARRING ROLE IN HOLLYWOOD MULTIFAMILY from page 1 Wilshire Skyline built The Line Lofts, an 82-unit, six-story multifamily development at 1737 N. Las Palmas Ave. The Derby Hollywood will reflect the asset's historically rich Hollywood location, the neighborhood's history rooted in film and entertainment, and the celebrities depicted in the building's famous murals, like Elvis and The Beatles.

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