Long Beach Revamp Extends Beyond DT

Robert Stepp is a principal at Stepp Commercial.

LOS ANGELES—The Long Beach market has gotten a lot of attention lately from investors and developers, and is one of the prime emerging L.A. markets. While the headlines have focused on Downtown Long Beach, which is seeing loads of development, adaptive reuse projects and office migration, the revamp expands into other surrounding submarkets. One recent transaction in the Traffic Circle submarket, which is near the University of California State University, Long Beach, saw an investor trading out 10 properties in his portfolio to get one property in the market. “We are certainly seeing Long Beach becoming more progressive, and we are seeing that mainly in the retail outlets and restaurants,” Robert Stepp , a principal at Stepp Commercial , tells GlobeSt.com. “A lot of investors that are in rent controlled markets like West Hollywood are coming to Long Beach and renovating apartment product to appeal to a higher end asset that we haven’t seen previously, and that is attracting a higher end renter, which is translating into new development and restaurants and retail.” The Traffic Circle is one of several submarkets seeing increased investor interest. It is three miles from Belmont Shore and serves the student population at the university, keeping occupancy rates strong. But, it isn’t alone. “Second Street and Belmont Heights/Belmont Shore are seeing revitalization of higher end product coming into that corridor,” adds Stepp about the other markets getting attention. In addition to multifamily growth, those markets are also seeing new boutique restaurant and retail purveyors moving in and revitalizing the market. But, Long Beach has an additional value. Unlike other emerging submarkets in Los Angeles proper, Long Beach doesn’t have rent control policies, which make it even more attractive as an emerging market. Investors here have the opportunity to by value-add assets and push rents more aggressively or renovate and turn the properties more efficiently. In the Traffic Circle sale of Patio Gardens, the land underneath the property was one of the major draws. Patio Gardens, a 127-unit community with 19 buildings, sits on nearly six acres. “You can’t find a property that sits on this much land in Long Beach. It is extremely valuable,” says Stepp. While properties in these emerging submarkets don’t come to market very often, the land in this property was especially attractive and a characteristic that investors want in this changing market.