Newport Beach-based Lyon Capital acquired the development, at Ximeno Street and Pacific Coast Highway, from privately held Fowler Flanagan Partners and intends to launch a major renovation. A team of brokers from CB Richard Ellis represented Fowler Flanagan, while Lyon Capital was represented in-house by J.E. Burns.

Apartment builders, lenders and brokers say the region's multifamily market should stay strong this year, even though construction is expected to pick up a bit and the economy should slow. Though multifamily construction surged about 20% in the Southland last year, the estimated 25,000 units that were built still badly lagged demand, according to the Burbank-based Construction Industry Research Board.

Even another double-digit gain in construction in 2001 wouldn't come close to easing the region's apartment shortage. About 150,000 new multifamily units are expected to be built across the state this year, but real estate experts say California needs as many as 250,000 new homes a year just to keep pace with its fast-growing population.

Vacancies in San Diego and Orange counties are already at a record-low 2% and stand at about 5% in Los Angeles and the Inland Empire. Rents in many Southland communities rose more than 10% last year and "we'll still see a robust expansion in rent" in 2001, says Harvey E. Green, president/CEO of Marcus & Millichap Real Estate Investment Brokerage in Encino.

Indeed, a forecast by Grubb & Ellis says that demand for rental units this year will outstrip supply by a 12-to-1 margin. "With land costs and financing where they are now and other barriers to entry, there is a pent-up demand that is not being met," says Lewis Halpert, executive managing director and president of the residential investment group of Beverly Hills-based Kennedy-Wilson International. "Population growth is far exceeding product inventory," he says.

For years, Halpert and other experts have worried that the Southland's lack of affordable housing would eventually take a toll on the regional economy. Those concerns weren't eased in the second half of 2000, when a handful of companies announced that they were moving out of the area to other cities where workers can afford to lease an apartment or purchase a house.

"We're underbuilt. In the long term, that's not a good thing for us or the overall economy," says Fred Tuomi, president of the Aliso Viejo-based Western Division of apartment giant Equity Residential Properties Trust. "If you can't hire employees who live where the jobs are, that's a constraining factor" on growth, he adds.

On a more positive note, most experts say mortgage rates will either stay level or even drop as 2001 progresses. "There's no shortage of money to lend," says Howard Levine, founder and chairman of ARCS Commercial Mortgage in Calabasas Hills, the area's largest multifamily lender. "For buyers, the hard part will be finding property that someone is willing to sell" because many owners are hanging on to their properties in anticipation of more big gains in rents and property values.