FPA Multifamily Sells Central Valley Property for $30M

FPA Multifamily has sold ReNew, a 128-unit apartment complex, to an unnamed private investor for $30.7 million. The property is located in Visalia, a city in the Central Valley near Santa Barbara.

Located at 3315 Lovers Lane, the garden-style property was built in 2008 on a nearly 7-acre land site. It features 16 buildings totaling 119,608 rentable square feet with a mix of one-, two- and three-bedroom floorplans. The property also has a swimming pool, recreation room with wet-bar, laundry facilities, clubhouse, spa, and reserved parking for residents.

FPA Multifamily purchased the property two years ago, and was able to sell the asset with a price increase of 50%. The deal illustrates the growth in the region over the last several years. In the last two years, 445 properties have traded hands, and the average sales price per unit increased 21% from $111,275 to $135,444.  The Mogharebi Group brokered the deal on behalf of FPA, and they have brokered 10% of all multifamily transactions in the Central Valley in the last 24 months.

It isn’t surprising to see the Central Valley apartment market has performed well. Both Northern California and Southern California have also seen strong demand and apartment fundamentals, particularly in the last 12 months, and there is a dearth of housing supply throughout the state. In Los Angeles, the closest major metro to the Central Valley, Marcus & Millichap research shows fervent demand is driving down vacancy rates as rents increase. Vacancy in the market has declined by at least 350 basis points in Downtown Los Angeles and the Westside markets, two of the largest employment hubs in the city. As a result, the two submarkets have a sub 2% vacancy rate. Marcus & Millichap expects rents to increase another 7.2% this year on top of a 14% increase in 2021.

San Francisco, which sits further north from the Central Valley, has struggled since the start of the pandemic with slowed growth at the end of the year. While rents have not yet returned to pre-pandemic levels, and rents in December declined slightly. However, the market has stabilized and the surrounding areas are seeing an increase in demand. Outward migration could actually be working to the benefit of Central Valley owners. In the region, the greatest pricing increases could be found in 4- and 5-star properties, which increased 28 percent from $228,465 to $292,412, according to TMG.