The City of Orange is the latest location touched by the growing wave of “workforce housing” conversions.
BLDG Partners, a Beverly Hills-based real estate investment firm and developer, recently announced that it will join the trend after buying a 282-unit market-rate apartment building in Orange.
BLDG paid $142 million for the Allure Apartments complex, a representative said, about $503,000 per unit. The priciest multifamily sale in Orange County in the past year came to $579,000 per unit when Intracrop sold the Amplifi, a relatively upscale and market-rate apartment complex in nearby Fullerton.
BLDG is partnering with the California Municipal Finance Authority, a joint powers authority, on the deal in Orange, which also had the backing of local government.
“In Orange, we are always looking for innovative ways to provide housing at all income levels, and the Allure apartments will help us meet the need for quality workforce housing in our community,” the city’s mayor, Mark A. Murphy, said in a release.
Matthew Ellis, a principal at BDLG, added that the transaction “ensures the availability of quality, attainable housing in Orange over the long term.”
Orange, a suburban city of some 140,000 residents, is located in central Orange County, just west of undeveloped parkland. According to the website RentCafe, average rent for an apartment in the city is currently $2,432 — nearly $400 more expensive than the average for nearby Anaheim. The City of Los Angeles, according to the website, has an average rent of $2,563.
And rents across the state, including in increasingly expensive Orange County, are only likely to keep rising: One study published in November by USC projected continued increases across Southern California through 2023, including in suburban areas that became increasingly attractive during the pandemic.
The Allure Apartments are located at 3099 W. Chapman Avenue, near both Interstate 5 and Angel Stadium. The complex sits on nearly five acres, according to records, and was sold by an institutional investor that had owned the property through an LLC since 2006.
The complex is currently market-rate and features amenities including a clubhouse, business center and jacuzzi; according to Allure’s website, one bedrooms are renting from roughly $2,400 to $2,700, and two bedrooms are renting from $2,600 to $4,000.
Under the terms of BLDG’s acquisition, existing tenants will be allowed to stay as long as they want, and existing tenants who meet the new income requirements will see rent reductions. All new leases, however, will be reserved for residents earning between 80 and 120 percent of area median income.
That “missing middle” housing category is primarily meant for working professionals, such as teachers or civil servants, who don’t qualify for traditional affordable housing but are nevertheless cost-burdened, or even pushed out, by California’s soaring rental prices.
It’s a large cohort, and over the past year or more, developers and governmental agencies have made a concerted push to add more “workforce” units, typically through market-rate conversions that are financed by tax-exempt bonds: Last year four of L.A. County’s five biggest multifamily deals were acquisitions slated for the conversions, including a $300 million purchase of an apartment complex in Glendale and a $220 million purchase in Carson.
Orange County has also seen notable “workforce” deals, including one $127 million apartment purchase less than two miles from the Allure Apartments.
The Allure deal “marks BLDG’s second affordable housing transaction” in Orange within the past year, the release noted. Last February the firm also bought The Knolls, a 260-unit apartment building in Orange for tenants who earn less than 60 percent of area median income. On that deal BLDG partnered with the Foundation for Affordable Housing, a Laguna Beach-based nonprofit.