Pasadena, Calif. - Multi-family development has heated up in the city with the opening of two prominent apartment communities and more on the way.
Between January 2000 and September 2006, Pasadena added 3,137 multifamily units. Another 1,074 units were under construction, and approximately 3,500 units were in the pipeline as of last fall, according to Eric Duyshart, the city’s economic development manager. Those figures are citywide, but a big majority of the activity is in downtown.
Through infrastructure improvements and other moves, the city has tried to accommodate new mixed-use developments in downtown in the last several years, Duyshart said.
The reason for this growth is a pretty stable local economy and the new 13-mile Metro Gold Line light-rail system between Los Angeles and Pasadena.
“Pasadena has something for everyone; it is a self-contained city,” said Kevin Lutz, senior investment adviser for Hendricks & Partners, a Phoenix-based apartment sales and research firm. “You can house every range of worker from minimum wage to top-level executives. Home prices can range from $400,000 up to a current listing on the market of $54,000,000.”
The firm reports that the multifamily vacancy rate hit 4.9 percent in the fourth quarter of 2006, up from 3.8 percent the prior year. This was attributed to the completion of a couple of large apartment communities. The addition of these quality properties also pushed rents higher. Effective rents gained nearly 8 percent, according to Lutz, who noted that sales volume was down from 2005.
Looking ahead, the completion of several high-end condominium properties as well as the addition of more apartments this year will push the vacancy rate slightly above historical norms as the market absorbs the new product, according to Lutz. “But certainly we expect vacancy rates to remain under equilibrium, which has been the case since 2001,” he said.
During the fourth quarter of 2006, the average monthly rent in Pasadena was $2,151, one of the highest in Los Angeles County, according to RealFacts, a multifamily research firm. The average occupancy rate, however, was just 90.4 percent during the quarter, reported RealFacts.
Pasadena, which is best known for its Rose Parade, is blooming with new multifamily developments. Two major apartment communities to open recently are Shea Properties’ Trio community and Archstone-Smith’s Del Mar Station.
The $70 million Trio is a mixed-use infill project that features 304 apartments. It makes up an entire city block in the Playhouse District. Shea developed the property as a joint venture with Capital and Counties USA, Inc.
The apartments opened last fall and were approximately 95 percent occupied, according to Dan O’Melveny, construction manager at Shea.
The project, which blends traditional Spanish, contemporary, and urban designs, involved both new construction and the renovation of a historic parking building that has been turned into the Trio’s leasing offices and five loft units.
Archstone-Smith’s Del Mar Station was completed at the end of 2006. The 347-unit development is bisected by the Metro Gold Line’s Del Mar station.