Amid nationwide interest, Harbor Heights Manor nabbed by local investor in largest sale of a multifamily property ever in Santa Barbara, largest on California’s South Coast since 2010.
Sales of investment property on California’s South Coast reached a new high when the Harbor Heights Manor apartment complex at 801 Cliff Dr. in Santa Barbara changed hands in January for more than $33 Million.
It is the largest sale of multifamily property ever recorded in the city of Santa Barbara, and the largest in the South Coast since the Tropicana Gardens in Isla Vista sold for $64.5 Million in 2010. The South Coast market is a 25 mile stretch of pristine coastline in Santa Barbara County that encompasses Isla Vista and the University of California, Santa Barbara at the northern tip, Goleta, Santa Barbara, Montecito, Summerland and Carpinteria.
The 97-unit complex, which occupies a sizable footprint on the doorstep of Santa Barbara City College—ranked the top community college in the nation in 2013 by the Aspen Institute—went on the market last August and quickly garnered numerous inquiries and more than a dozen offers from prospective buyers around the country.
The winning bidder, a local investor who was unnamed, entered into contract above asking price with no contingencies. Escrow closed in late January just five short months after the property was listed.
Brokers Steve Golis and Brian Johnson with Radius Commercial Real Estate & Investments represented both the buyer and the sellers, long-time Santa Barbara residents the Schulte family.
“Everything about this offering was desirable. The market, the location, the quality of property,” said Golis. “The existing market fundamentals for apartments continue to be extremely attractive to investors.”
According to Golis, one compelling market factor continues to be the strength of U. C. Santa Barbara and Santa Barbara City College. “Our vacancy for rental properties is one of the lowest in the country, just below 1%,” he said. “Population density, particularly in Isla Vista, is one of the tightest in the country, rivaling Manhattan. This adds up to incredible opportunity for substantial return on long-term investments in the area.”
In fact, the only thing that may quell the tide of apartment sales in the South Coast could be a scarcity of inventory. “We have seen more and more commercial real estate investors turn their attention from office, retail or industrial properties, so the competition for multifamily has been fierce,” said Golis.
As previously reported by Radius, multifamily transactions in the South Coast reached a six year high in 2013 with 22 sales of properties larger than five units and seven sales in the fourth quarter alone. This despite recent interest rate increases, bolstering the belief that demand for multifamily property in the market can withstand minor upward changes in interest rates, according to Golis
Prior to the Harbor Heights deal, recent high visibility sales in the market included the 63-unit New Tahitian Apartments in June for $14.3 Million, also handled by Golis and Johnson, and the September sale of the new luxury complex The Loop for $29.3 Million. Both properties enjoy close proximity to U.C.S.B. in Isla Vista.
“Harbor Heights had not been sold since it was built in 1971,” said Golis. “The owner recognized the timing had never been better to sell.”
“The buyer also understands the long-term value of this property. They saw this as an incredible opportunity to own a piece of real estate that is hard to duplicate in our area and plan to upgrade the asset and turn it into one of the premier student rentals in the south coast,” he said.
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