Multifamily sales in Greater Los Angeles continue to lag, hindered by elevated debt costs and recent transfer tax legislation in Los Angeles and Santa Monica.
In Q2 2024, multifamily transactions within Los Angeles city limits totaled approximately $630 million, a notable increase from the $556 million recorded in Q1 2024 and the highest in over a year. However, this figure remains around 40% below the quarterly averages of 2021 and 2022, the peak years for the sector.
The largest transaction in the city during the second quarter was the $122.1 million sale of Reveal Playa Vista. DivCore, a San Francisco investment manager, acquired the 214-unit property from Clarion Partners, a New York-based developer. The sale, which equates to $570,000 per unit, was finalized with Clarion paying nearly $7.4 million in transfer taxes. At the time of sale, the property was 93% leased and yielded a 4.3% cap rate.
Across Los Angeles County, multifamily sales reached $526 million in Q2, up from $421 million in Q1 but still about one-third of the average quarterly transaction volume seen in 2021 and 2022.
In Santa Monica, the largest transaction outside of Los Angeles city was the $16.9 million purchase of Princess Eugenia Apartments by Trojan Buildings. The 27-unit property was acquired as part of a 1031 exchange, which allows investors to defer capital gains taxes by swapping properties. Due to the transaction value exceeding $8 million, it was subject to a 5.71% transfer tax, amounting to nearly $965,000.
SOURCE: CoStar Analytics
