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Thursday, Dec 8, 2022
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College Crowd Demands Upscale Apartments

Agoura Hills affordable housing developer Amcal Multi-Housing Inc. has just sold its first student housing complex since diversifying into market-rate units. The company sold the Promontory, a 579-bed community at 400 8th St. in Marina, near Monterey, for $68.5 million to California State University Monterey Bay’s finance arm, the University Corporation at Monterey Bay. Previously a California-only and affordable-only builder, Amcal decided to diversify about five years ago, said Stephen Clarke, director of market rate housing. It targeted Texas for building affordable housing, and California for market-rate apartments. That includes student housing, Clarke said. “There’s definitely a need in California not being met by (university) campuses themselves,” he said. “The largest student housing developers have not targeted California yet.” Student housing appeals to Amcal because the built-in population is less vulnerable to market risk than regular market-rate apartments, Clarke added. Today’s student housing is a far cry from the small dormitories of the past. Certified Commercial Investment Member, a commercial trade association in Chicago, Ill., reported that institutional investors are increasingly interested in student housing for diversifying portfolios. That’s because of their increased safety, higher-grade amenities, faster internet speed, nearness to universities and Leadership in Energy and Environmental Design (LEED) standards, which make them less risky as environmental codes get stricter. The Promontory is adjacent to the university and has three buildings with four stories each plus a pool, internet café, basketball half-court, clubroom, 24-hour study spots, bicycle storage, fitness center, outdoor grills and seating areas. Clarke agreed that student housing has elevated in recent years, and many now include vacation-like amenities, such as resort-style pools and tanning facilities. “We’re not quite at that level, but we provide an amenity package equivalent to market-rate apartments,” Clarke said. “We haven’t seen the type of student housing developments in California as being built in the South. But it will come, I think.” Insufficient Storage Amid the Los Angeles region’s housing construction boom, one thing is missing: self-storage. The L.A. metropolitan area is one of the nation’s top five markets without enough self-storage facilities, according to a second-quarter market report by L.A.-based CBRE Group Inc.’s self-storage division. The CBRE report includes the San Fernando Valley and the Tri-Cities but doesn’t include Lancaster and Palmdale. It analyzed 38 metropolitan areas and found 16 to be under supplied, with San Jose, San Diego, New York and Baltimore in the top five. Self-storage is needed, the report said, now more than ever. New apartment units in revitalized and up-and-coming areas are decreasing in size. In downtown Los Angeles, new units on average are smaller by 11 percent, or 110 square feet, than they were 15 years ago, according to the report. CBRE Senior Vice President Nicholas Walker said that trend is also an issue in the San Fernando Valley and the Tri-Cities. Rising rents are also forcing people into smaller units, he added. “This trend cuts across all regions as every developer is trying to maximize returns,” Walker said. Rising apartment occupancy rates in the Valley and the Tri-Cities are one of the supply conditions that show more self-storage is needed. “The occupancies overall in those areas are north of 90 percent, and the rents have been growing somewhere in the neighborhood of 8 to 12 percent annually over the last several years,” Walker said. The L.A. area has “extremely high barriers to entry” for self-storage facilities, such as high land costs and building-height restrictions, he added, and those are even greater in the Valley and the Tri-Cities areas. “Self-storage facilities do not provide the tax revenues as other product types do, and they usually don’t create jobs,” Walker said, “so many cities are quite opposed to them.” Parking Demand The need for parking in and around Los Angeles is paying off for McCormick Construction in Burbank. The company has just finished, or is building, nearly 465,000 square feet of parking structures and more than 1,400 parking spaces just in Burbank. For Nickelodeon Animation Studio’s new location near the corners of Lake Street and Olive Avenue, McCormick finished a 450-stall, five-story garage. The company also is building a four-story garage for 525 vehicles at 800 S. Flower St. for Burbank’s Cusumano Real Estate Group. Finally, the company finished a 437-space, five-story parking structure for Contract Services Administration Trust Fund at 2800 Winona Ave. Staff Reporter Carol Lawrence can be reached at (818) 316-3123 or clawrence@sfvbj.com.

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