Chicago investor joins rush to Inland Empire multifamily with 736-unit buy

Terracina Apartment Homes within planned community in Ontario

3303 South Archibald Avenue,  Waterton's David Schwartz and Bridge's Robert Morse (Waterton, Bridge, Apartments)
3303 South Archibald Avenue,  Waterton's David Schwartz and Bridge's Robert Morse (Waterton, Bridge, Apartments)

Amid a pandemic-driven rush to the Inland Empire, one of the region’s largest apartment complexes has traded hands.

Bridge Investment Group sold the Terracina Apartment Homes, a 46-building, 736-unit complex in Ontario, to Waterton for an undisclosed price.

Marcus & Millichap announced the recent deal this week but did not disclose the buyer. The San Bernardino Sun reported that the buyer was Waterton, a Chicago-based investor.

The complex is part of Ontario Ranch, among the country’s largest planned communities and the “five largest multifamily assets in the Inland Empire”, according to an announcement from Marcus & Millichap. It was built in 1989, making it one of the earliest projects of the development, which has ramped up considerably in recent years.

Brokers from Institutional Property Advisors, a division of Marcus & Millichap, represented the seller. Kevin Green, the division’s executive director, cited the region’s growing healthcare and transportation sectors and shifting pandemic patterns — namely increased interest in lower density and more suburban homes — for driving up the Inland Empire’s housing demand.

Green and a representative for Marcus & Millichap did not immediately respond to interview requests. A representative for Bridge also did not immediately respond.

The two-county Inland Empire market has been red hot. While sky-high housing prices in coastal California, particularly L.A. County and the Bay Area, have been pushing residents out, many Californians have found their way to Riverside and San Bernardino Counties, which are still within commuting distance from Greater L.A. and remained relatively affordable. In 2020 alone — even as California as a whole lost population — the Inland Empire added more than 25,000 households, tying Phoenix for the region with the biggest gain.

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“People say over and over again, ‘Oh, the millennials are going to stay in the cities,’” Doug Shepherd, a Riverside-based broker, told the Wall Street Journal. “They are not.”

The demand surge led to a price explosion: According to an analysis by the San Francisco Chronicle, seven of the 10 California zip codes that saw the biggest home value increases on Zillow between January 2020 and January 2022 are in San Bernardino County. In the San Bernardino community of Landers, which took the top spot, the average home value shot up 84 percent.

But prices in the Inland Empire, which has also experienced a controversial industrial surge, are still considerably lower than those in places like L.A. and Orange County.

The various trends combine to foster a strong outlook for apartments in the Inland Empire. An investment forecast published by Marcus & Millichap in March placed the region’s 2022 multifamily market as the 14th most promising in the country, the highest of any California market.

The sale of the apartment complex at Ontario Ranch is the latest news for the planned community, which is being partly developed by Brookfield Residential and has more recently been busy with new construction. The project has seen more than 1,000 homes sales, the OC Register reported, ranking it as Southern California’s top-selling new home community. The whole project is slated to eventually cover 8,200 acres, or nearly 13 square miles, among the biggest planned communities in the country.

The “garden style” Terracina Apartment Homes were built in 1989 and occupy two parcels that total 41 acres. Waterton, which owns dozens of multifamily properties throughout the country, is renaming the complex and plans an upgrade, the Sun reported.

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