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LA tops US I-sales market in 2019
Multifamily and industrial sales reached all-time highs as foreign investors continued selloff
Los Angeles County surpassed Manhattan to become the top investment sales market in the U.S. last year, totaling more than $28 billion on record-high multifamily and industrial activity. Part of L.A.’s high dollar amount was attributed to foreign investors — including the continued pullback from Chinese firms — that sold off hundreds of millions of dollars worth of assets.
According to CBRE’s capital markets report for 2019, multifamily sales volume reached $9.5 billion and industrial sales hit $7.7 billion, both all-time highs. The county’s total sales activity was about in line with the past four years, though retail activity saw a sharp fall-off from 2018, according to the report.
CBRE noted that institutional investors acquired more properties than they sold — $1.9 billion in net acquisitions — reversing a six-year trend.
But for the first time since 2012, international investors and developers were net sellers, unloading more than $368 million in assets countywide.
Analysts partially attributed that shift to another year of contraction in Chinese investment, which cratered to $64 million in L.A. County in 2019, from a high of $1.5 billion in 2016.
Trade tensions between the U.S. and China are partly to blame, according to the report. China has continued to tighten its belt on overseas investment nationwide, and in L.A. in particular. Direct investment by Chinese companies in the U.S. dropped from a six-month average of more than $20 billion in 2016 and the first half of 2017, to less than $5 billion on average in the last two years, according to December data from Rhodium Group.
Countywide, multifamily and industrial investment sales dominated the commercial real estate market in 2019. CBRE said the rise of multifamily and industrial investment activity in Los Angeles County reflects the continued demand for rental properties amid a housing shortage, and the continued need to satisfy e-commerce needs. Those factors have cemented multifamily and industrial properties “as preferred asset classes for investment.”
Some of the priciest multifamily deals last year included Daydream Apartments’ $405 million purchase of the 575-unit Griffin and Grace on Spring in Downtown; and Douglas Emmett’s $365 million acquisition of the 350-unit Glendon at Westwood apartment and retail complex.
On the industrial side, Goodman Group nabbed the two most expensive acquisitions last year. The Australia-based firm paid $230 million for a 1.7 million-square-foot former military plane assembly factory in Long Beach and $130 million for a manufacturing facility in Atwater Village. Blackstone Group’s $124 million purchase of a 700,000-square-foot building in Cerritos took the No. 3 spot, and was part of its massive industrial portfolio deal with GLP.