DOWNEY, CA—The Downey submarket is experiencing strong demand for multifamily housing, according to Chris Keramati, a broker with Investment Property Group. Keramati recently represented the buyers and sellers of two multifamily transactions in the Downey submarket totaling nearly $25 million, GlobeSt.com reports exclusively.

“Downey is the jewel of the whole 605 corridor, and it has the strongest job market of all of the submarkets in that area,” Keramati tells GlobeSt.com. “The demand right now in Downey on buildings that actually go out to market is just astronomical, with significant cap rate compression over the last 12 and even six months. Most buildings that come to market get multiple offers.”

Pendo Investments purchased the larger of the two properties from a family operating under Downey Pointe Malcai LLC for $18.6 million. Located at 7301 Florence Ave. in Downey, the property has 96 units and is 96% to 98% occupied. According to Keramati, the seller chose to dispose of the property because of the strong values in the submarket. "We have experienced a very strong rental market over the last few years that has helped to drive rental rates up and cap rates down,” he explains. “At this point, the seller wanted to sell the property and redistribute the equity through a 1031 exchange and more or less picking up cheaper debt on replacement properties.”

Rodriguez Living Trust purchased the second smaller property from Rio Co. for $6.3 million. Located at 9731 Imperial Hwy., the 36-unit apartment complex has a 95% occupancy and a potential gross operating income of $509,000. Rio Co. purchased the property for $4.9 million two years ago, in a transaction also negotiated by Keramati. “They had a five-year exit plan, but they were able to hit their hurdles in two years,” he says. “We sold the property off the market and had two competing offers.”

For both properties, the high multifamily demand led to competitive bidding. “We had a lot of interest on both of these properties,” says Keramati, adding that for the larger property, he received 10 initial offers. “Within the first few weeks, we had multiple offers. We went down to the second round of counters, and at that point we had about three people competing for the property.”