Former Hollywood resident Darin Beebower remembers when Tinseltown wasn't on the A-list. "When I'd get home from work, guys would be asking me if I wanted to buy drugs," recalls the multifamily division director for Los Angeles-based Madison Partners, a full-service commercial brokerage. "You were kind of concerned when you walked out the door."
But those days are gone. Today, Hollywood is back–with a bullet–and is the star of Los Angeles' blockbuster residential real estate market. Demand is especially high for residential properties in Hollywood, with 18 apartment properties and four undeveloped multifamily parcels changing hands since January 2005.
Hollywood in general is experiencing increased deal velocity, particularly for rental properties, which are in high demand. The Community Redevelopment Agency of Los Angeles estimates that 90 percent of Hollywood's residents are renters. And they're occupying almost every available unit, slashing vacancy to 2.4 percent at the close of 2005.
Beebower's old neighborhood–bordered by Hollywood and Cahuenga Boulevards and Franklin and Highland Avenues–has been the most active section of Tinseltown. In the last year alone, 482 units in 10 multifamily properties have sold for a whopping $57.8 million. Residential demand is beginning to affect Hollywood's soft office market, too. A former office building on Yucca Street sold for $2.9 million to developers who will raze and replace it with a 54-unit condo community.
"Astute investors are buying properties in this very strong neighborhood near Hollywood and Highland because many are rent-controlled," notes Beebower. "Many of the current owners don't have the resources or the desire to spend the kind of money necessary to make renovations. So for investors with skills and experience in renovating, it's a great opportunity."