Notable transaction is largest sale of multi-family property in Santa Barbara County this year. Investor demand for apartments remains at all-time high despite shrinking inventory in Isla Vista.
The 63-unit New Tahitian Apartments located at 6739 El Colegio Rd. in the college community of Isla Vista, CA recently sold to a local investor for $14.3 million, marking the largest sale by far of a multi-family property in Santa Barbara County in 2013. Escrow closed June 13. The transaction is also the largest multi-family sale in Isla Vista since 2010 when the Tropicana Del Norte Apartments sold for more than $37 million.
“Apartments continue to be at the top of many real estate investors’ short list, but opportunities like this in Isla Vista are few and far between,” said Radius Commercial Real Estate & Investments founder Steve Golis. Golis and Radius agents Brian Johnson and Jon Standring represented the seller of the New Tahitian. The buyer was represented by Evan Bank of Prudential California Realty, Monarch Beach Office.
Golis underscored The Tahitian’s close proximity to the University of California, Santa Barbara as one of the main selling points for the new owner, Capitoline Properties, LLC, a relatively new real estate investments company based in Santa Barbara with an office in Orange County.
“Isla Vista is just a very attractive micro-market,” said Golis. “With UCSB’s large student population in the backyard, and IV’s high population density, second only to Manhattan, IV’s apartment vacancy tends to be among the lowest in California and the nation. That translates to consistent rental income at premium rates, and that gets the attention of investors when a property of this size in this area comes to market.”
“We’re looking to build a portfolio throughout California, especially here in Santa Barbara and the Central Coast,” said a representative from Capitoline. “We seized this opportunity as a long term investment, especially because of its strong value add potential and the strength of the rental and real estate market as a whole.”
Shortly after the recession hit in late 2008, apartments became a hot ticket among investors and interest has remained strong. “It’s not uncommon to receive numerous offers from qualified buyers, including offers over the asking price, non-contingent and all cash,” said Golis.
“Apartments offer everything a conservative investor looks for,” said Golis, pointing to historically low vacancy rates (current vacancy in Santa Barbara County is just 0.94% according to the most recent Dyer Sheehan survey), attractive financing and a strong rental market.
And because of the popularity of the category, the market has tightened dramatically in the past few years. There have been just 11 multi-family sales in Isla Vista since January, 2011 (four in 2013, two in all of 2012 and five total in 2011). There were 14 sales in 2010 alone, 11 in 2009 and 14 in 2008.
“More often than not, commercial properties sell when there is vacancy in the building and owners aren’t generating any income to cover expenses,” said Golis. “There aren’t many apartments on the market right now because many are in a position where their properties are 100% leased and they are making money so they have no compelling reason to sell.”
The New Tahitian Apartments was built in 1962 and was branded as the New Tahitian Apartments in 2008 when it underwent an extensive $1.6 million remodel.
“We plan on doing a full landscape as well as renovations to the pools and common areas. Otherwise the property’s condition is solid as is,” noted the Capitoline representative.
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