se u b d u - loopnet · 14618 sylvan st van nuys, ca. location overview. the city of van nuys. van...

R O B E R T N A R C H ISenior Vice President Investments

Senior DirectorNational Multi Housing Group

Direct | [email protected]

• 2016 Construction• Separately Metered for

all Utilities

• Beautifully AppointedUnits

• Ideal Unit Mix(6) 2 Bedroom + 2 Bathroom(4) 1 Bedroom + 1 Bathroom

• Directly Adjacent to the FutureLight Rail Line

mailto:[email protected]

R O B E R T N A R C H ISenior Vice President InvestmentsSenior DirectorNational Multi Housing GroupDirect | [email protected]

M A R C U S & M I L L I C H A PWest Los Angeles12100 West Olympic BoulevardSuite 350Los Angeles, CA 90064Main: (310) 909-5500

NON-ENDORSEMENTSMarcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant orlessee identified in this marketing package. The presence of any corporation's logo or name is notintended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporationof Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commerciallisting of Marcus & Millichap, and is solely included for the purpose of providing tenant lesseeinformation about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY.PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

DISCLAIMERTHIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS OF VALUE AND SHOULDNOT BE CONSIDERED AN APPRAISAL. This information has been secured from sources we believeto be reliable, but we make no representations or warranties, express or implied, as to theaccuracy of the information. References to square footage or age are approximate. Buyer mustverify the information and bears all risk for any inaccuracies. Marcus & Millichap is a service markof Marcus & Millichap Real Estate Investment Services, Inc. Â© 2017 Marcus & Millichap. All rightsreserved.


#

Marcus & Millichap is pleased to present for sale this newly constructed 2016 10-Unitapartment building situated at 14618 Sylvan St Van Nuys, CA 91411. The property boasts adiverse unit mix of 4 one-bedroom/one-bathroom units and 6 two-bedroom/two-bathroomunits including storage spaces on each floor with almost 11,000 rentable square footage. This property has 16 gated subterranean parking spaces. Flush with beautiful hardwood floors,Quartz counter tops, elegant ceramic tiled kitchens/bathrooms, tafsa white chocolatethermo-foil finished cabinets, walk-in closets, private balconies, centralizedair conditioning/heating, separately metered for all units, individual water heaters,outdoor common area with view of Verdugo Mountains, recreation room, bike storage oneach floor and separate meters for water, sewer, gas, and electric.

This investment is not subject to rent control offering the investor the opportunity to ride therapidly increasing rents in a very tight sub market where multi-family is always in strong demand.

INVESTMENT OVERVIEW

P R O P E R T Y S U M M A R Y

1 4 6 1 8 S Y L V A N S T V A N N U Y S , C A

Address 14618 Sylvan St Van Nuys, CA 91411

APN 2241-011-005

Year Built 2016

Subterranean Parking 16

Building Net RSF 10,550 SF

Lot Size 8,001 SF

Number of Units 10

Unit Mix 4 (1+1) 6 (2+2)

124


K I T C H E N I N T E R I O R

125


L I V I N G R O O M & B E D R O O M

126


P R O P E R T Y E X T E R I O R

127


C O M M O N A R E A S

❖ Recreation Room❖ Open/Outdoor Area with Views❖ Bike Storage on Each Floor❖ Bike Parking in Front of Building❖ Larger-Sized Elevator❖ Electric Vehicle Gate❖ Trash Chute on every Residential floor❖ Trash Room❖ Recycle Room❖ Janitorial/Maintenance rooms on Every floor❖ Landscaping❖ Smart Weather-Based Landscape irrigation

controller

8


L O C A T I O N O V E R V I E WThe City Of Van Nuys

Van Nuys is a neighborhood in the central San Fernando Valley region of the city of Los Angeles in California. It is home to Van Nuys Airport, the Valley Municipal Building, and is the only neighborhood in the San Fernando Valley with a population well exceeding 100,000 residents. Van Nuys was the first new stop on the San Fernando Line of the Pacific Electric Railway red cars system, which boosted its early land sales and commercial success. Nearly 74% of all housing stock in the city is held by renters. The high demand has translated to encouraging effective rent growth. Van Nuys Airport (VNY), located 3.5 miles Northeast of the property plays a crucial role in the southern California airport system and ranks one of the world’s busiest general aviation airports serving 320,000 passengers per year. There are 243 companies with more than 500 employees at each location within 10 miles. The top employers include entertainment companies such as Walt Disney Company, NBC Universal, CBS, Warner Bros, and the Van Nuys Civic Courthouse, Los Angeles Department of Building and Safety, Internal Revenue Office, Los Angeles County Registrar- Recorder and the van Nuys Police Station. The Sylvan Apartments are located in a strong rental market in which an estimated 67% of the residence reside in rental units. The average household income is $68,890 and 66% of the residence are white collar workers. The medium age is 28 considered young by city and county standards and this age group prefers to walk and/or ride public transportation to work and entertainment.

#

OFFERING SUMMARY


O F F E R I N G S U M M A R YSummary

Price $4,149,000

Down Payment $4,149,000 100%Number of Units 10 Income Current Market DataPrice Per Unit $414,900 Gross Scheduled Rent $252,600 $281,400Price Per Net SqFt $393.27 Less: Vacancy Rate Reserve 3.0% $7,578 3.0% $8,442Rentable SqFt 10,550 Gross Operating Income $245,022 $272,958Lot Size 0.18 Acres Other Income $1,800 $2,400

Year Built 2016 Effective Gross Income $246,822 $275,358

Less: Expenses 30% $74,613 27% $74,613

Net Operating Income $170,409 $198,345

Returns Current Market Data Reno Pre-Tax Cash Flow $170,409 $198,345

CAP Rate 4.11% 4.78% 0.00%

GRM 16.43 14.74 0.00 Net Cash Flow After Debt Service

$170,409 $198,345

Cash-on-Cash 4.11% 4.78% 0.00%

N/A Total Return 4.11% $170,409 4.78% $198,345

Financing Expenses Current Market Data

All Cash $0 $48,790 $48,790

Loan Type Free and Clear $3,340 $3,340

Interest Rate N/A $3,500 $3,500Amortization N/A $7,000 $7,000Year Due N/A $2,450 $2,450

$2,500 $2,500Loan information is subject to change. Contact your Marcus & Millichap Capital Corporation

representative. $1,200 $1,200

Real Estate Taxes

Insurance

UtilitiesMaintenance & Repairs RubbishReserves/Misc.

Gardening

ElevatorTelephone/Intercom

$2,850 $2,850

# Of Units Unit Type SqFt/Unit Scheduled Rents Market Rents

4 One Bedroom/One Bathroom 850 $1,850 $1,995

6 Two Bedroom/Two Bathroom 905-1,020 $2,250 $2,395 Total Expenses $74,613 $74,613

0 Expenses/Unit $7,461 $7,4610 Expenses/Net/SF $7.07 $7.07

$2,400 $2,400

#

OFFERING SUMMARY

A r c o 2 9 5 S . A z u s a A v e A z u s a , C A

R E N T R O L L S U M M A R Y

NUMBER RENTAL CURRENT POTENTIALUNIT TYPE OF RANGE AVERAGE MONTHLY AVERAGE MONTHLY

UNITS RENT INCOME RENT INCOME

One Bedroom/One Bathroom 4$1,850 - $1,850

$1,850 $7,400 $1,995 $7,980

Two Bedroom/ Two Bathroom 6$2,250 - $2,250

$2,250 $13,500 $2,395 $14,370

Totals/Weighted Averages 10 $2,090 $20,900 $2,175 $22,350

Gross Annualized Rents $250,800 $268,200

#

OFFERING SUMMARY


R E N T R O L L D E T A I L

CURRENTUNIT UNIT TYPE RENT/MONTH

201 One Bedroom/One Bathroom $1,850




301 Two Bedroom/ Two Bathroom $2,250






Total $20,900


L O C A T I O N O V E R V I E W

SUBJECT PROPERTY

VAN NUYS CIVIC

CENTER

PROPOSED FUTURE LIGHT RAIL LINE

SALES COMPARABLES MAP

13

14618 SYLVAN ST(SUBJECT)

6737 De Soto Ave

6358 Hazeltine Street

18528 Chase Street

6844 Woodman Ave

7359 Kester Ave

11214 Morrison Ave

SALES COMPARABLESIN ESCROW COMPARABLESON MARKET COMPARABLES

1

2

3

4

S A L E S C O M P A R A B L E S


5

6

PROPERTY NAME

SALES COMPARABLES

SALES COMPARABLES

IN ESCROW COMPARABLESON MARKET COMPARABLES



Avg. 4.20%

1.20

1.70

2.20

2.70

3.20

3.70

4.20

4.70

5.20

14618 Sylvan

St

6737 De Soto

Ave

6358 Hazeltine

Ave

18528 Chase

St

6844 Woodman

Ave

7359 Kester Ave

11214 Morrison

Ave

Average Cap Rate Avg. 16.83

5.00

7.00

9.00

11.00

13.00

15.00

17.00

19.00

14618 Sylvan

St

6737 De Soto

Ave

6358 Hazeltine

Ave

18528 Chase

St

6844 Woodman

Ave

7359 Kester Ave

11214 Morrison

Ave

Average GRM

Avg. $383.94

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

500.00

14618 Sylvan

St

6737 De Soto

Ave

6358 Hazeltine

Ave

18528 Clark

St

6844 Woodman

Ave

7359 Kester Ave

11214 Morrison

Ave

Average Price Per Square Foot

Avg. $448,214

$100,000.00

$150,000.00

$200,000.00

$250,000.00

$300,000.00

$350,000.00

$400,000.00

$450,000.00

$500,000.00

$550,000.00

$600,000.00

14618 Sylvan

St

6737 De Soto

Ave

6358 Hazeltine

Ave

18528Chase

St

6844 Woodman

Ave

7359 Kester Ave

11214Morrison

Ave

Average Price Per Unit



Units Unit Type

Offering Price: $4,149,00 4 1 Bdr 1 Bath

Price/Unit: $414,900 6 2 Bdr 2 Bath

Price/Net/SF: $393.27

CAP Rate: 4.11%

GRM: 16.43Total No. of Units: 10

Year Built: 2016

1 4 6 1 8 S Y L V A N S T

14618 Sylvan St, Van Nuys, CA, 91411

Units Unit TypeClose Of Escrow: 8/1/2017 1 3 Bdr 3 Bath

Sales Price: $11,500,000 26 3 Bdr 3 Bath

Price/Unit: $425,926 Price/SF: $277.43

.

GRM: 16.85 Total No. of Units: 27Year Built: 2005

6 7 3 7 D E S O T O A V E6737 De Soto Ave, Canoga Park, CA, 91303

Units Unit TypeClose Of Escrow:

Sales Price: $1,700,000

2 2 Bdr 1 Bath

Price/Unit: $425,0002 3 Bdr 2 Bath

Price/SF: $463.22CAP Rate: 4.03%GRM: 16.10Total No. of Units: 4

Year Built: 2016

6 3 5 8 H A Z E L T I N E A V E6358 Hazeltine Ave, Van Nuys, CA, 91401

7/19/2018

CAP Rate: 4.04% .



Units Unit TypeClose Of Escrow: 4 1 Bdr 1 BathSales Price: $10,600,000 1 2 Bdr 1 Bath

Price/Unit: $378,571 5 2 Bdr 2 BathPrice/SF: $330.65 18 3 Bdr 2 BathTotal No. of Units: 28

Year Built: 2017

1 8 5 2 8 C H A S E S T R E E T

18528 Chase Street , Northridge , CA, 91324

Units Unit Type6 Studio 1 Bath

Sale Price: $3,100,000 2 1 Bdr 1 BathPrice/Unit: $387,500 4 2 Bdr 2 BathPrice/SF: $389.45Total No. of Units: 12

Year Built: 1988

14218 Victory Blvd, Van Nuys, CA 91401

7 3 5 9 K E S T E R A V E

7359 Kester Ave Van Nuys, CA 91405

Units Unit TypeClose Of Escrow: 7/13/2017 6 3 Bdr 2.5 Bath

Sales Price: $3,175,000

Price/Unit: $529,166Price/SF: $377.98Total No. of Units:

6

Year Built: 2017

4/8/2018

CAP Rate: 4.26% . GRM: 16.10 .

1 4 2 1 8 V I C T O R Y B L V D

Close Of Escrow: 6/22/2018

CAP Rate: .GRM: .

CAP Rate: . GRM: . 16.18

3.90% 5.01%18.76



Units Unit Type

10/18/2017 4 2 Bdr 2 Bath

List Price: $3,150,000 2 1 Bdr 1 BathPrice/Unit: $525,000

Total No. of Units:

6

2016

1 1 2 1 4 M O R R I S O N A V E

11214 Morrison Ave North Hollywood, CA 91601

Units Unit TypeClose OfClose Of EscrowEscrow:: 10/18/2017 4 2 Bdr 2 Bath

Sale Price: $3,150,000 2 1 Bdr 1 BathPrice/Unit: $525,000

Price/SF: $403.85Total No. of Units:

6

Year Built: 2016

6 8 4 4 W O O D M A N A V E

6844 Woodman Ave, Van Nuys, CA 91405

Units Unit Type

On Market: 6 1 Bed 1 BathList Price: $6,995,000 5 2 Bed 2 BathPrice/Unit: $466,333 4 3 Bed 2 BathPrice/SF: $444.97Total No. ofUnits

15

Year Built: 2017

CAP Rate: 3.23% . GRM: .

CAP Rate: 4.92% . GRM: . 15.20 18.63

OVERVIEWSAN FERNANDO VALLEY

DIVERSE ECONOMYWhile the entertainment industry underpins the economy, other economic drivers include aerospace, insurance and healthcare.

EDUCATED WORKFORCERoughly 35 percent of San Fernando Valley’s age 25 and older population hold a bachelor’s degree and 12 percent also obtained a graduate or professional degree. POPULATION AND HOUSEHOLD GROWTHPopulation and household growth will increase faster than other large metros in Southern California, generating a demand for housing, and goods and services.

Approximately 2.5 million people reside in the San Fernando Valley,

which includes the submarkets of Northridge-Northwest San

Fernando Valley, Van Nuys-Northeast San Fernando Valley,

Woodland Hills, Burbank-Glendale-Pasadena and Sherman Oaks-

North Hollywood-Encino. The area’s population is expected to

increase by 50,000 new residents through 2021. Many people are

attracted by the region’s more affordable home prices.

▪ Known for its entertainment industry, the Valley boasts more than 100 soundstages.Entertainment giants calling the Valley home include Walt Disney Co., Universal Studios,Warner Brothers, DreamWorks and Paramount Ranch.

▪ Aerospace giants Boeing and Northrop Grumman as well as 21st Century Insurancegenerate numerous well-paying jobs.

▪ Healthcare is also a major source of employment with providers that include KaiserPermanente and Providence Health & Services. As a result of its large concentration of highsalaries and successful companies, household incomes are above the national average.

38.32016

MEDIAN AGE:

$62,7002016 MEDIAN

HOUSEHOLD INCOME:

DEMOGRAPHICS

U.S. Median:

37.7U.S. Median:

$57,200

2.5M2016

POPULATION:

Growth2016-2021*:

1.9%

873K2016

HOUSEHOLDS:

2.3%Growth

2016-2021*:

ECONOMY

METRO HIGHLIGHTS

* Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau


14618 SYLVAN ST

LOS ANGELES METRO AREA

* Estimate; ** Forecast; Through 3Q; Trailing 12-month average

Sources: CoStar Group, Inc.; MPF Research; Real Capital Analytics

This year, job growth rebounds at an opportune time, sparking demand for new units. Fueled by aconsistently expanding professional sector, the metro’s employment base will swell by more than50,000 positions in 2018. A tight labor market has prompted employers to recruit from outside themetro to fill higher-paying tech, law and financial-related job openings. Relocations and incomegrowth should support a heightened rate of household formations, which bodes well for the rentalmarket during a period of out-of-reach home prices and elevated apartment construction.Downtown Los Angeles and adjacent Mid-Wilshire are slated to receive the largest influx of new unitsthis year, placing further upward pressure on vacancy, namely in the downtown area. Hollywood,Marina del Rey and Glendale will also witness upticks in delivery volume, yet pent-up demand shouldsustain availability at or below 4 percent. Elsewhere, a lack of large-scale development will allowabsorption to catch up with new supply, holding metro vacancy below 6 percent at year end.

Rise in valuations pushes private investors outside the core. An extended period of asset valueappreciation and a growing buyer pool have motivated more owners to list newer properties andolder value-add complexes in Los Angeles County. The sharp rise in apartment supply withinDowntown Los Angeles has core-focused investors targeting opportunities in the nearbyneighborhoods of Hollywood, Mid-Wilshire and Koreatown. Here, upside-producing Class B and Cassets often net buyers low-3 percent to low-4 percent yields. Minimal deliveries and limited vacancyin Santa Monica heighten institutional buyer demand for Class A rentals throughout Silicon Beach.Here, minimum yields bottom out below 3 percent. Local and in-state investors active in the sub-$10million tranche prefer properties in Glendale, Pasadena and Burbank, attracted to these markets’proximity to employment hubs and higher yields.

Cycle-High Apartment Development OvershadowsRobust Rental Demand


14618 SYLVAN ST

LOS ANGELES METRO AREA

2018 Market Forecast

* Estimate ** ForecastSources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics

A surge in construction offset job gains to drop last year’s top metro tothe second slot.

Employers will hire 53,000 workers in 2018, an increase from the 45,000positions added last year.

Focusing on downtown Los Angeles submarkets and Marina del Rey,developers will complete more than 17,000 rentals in 2018, a rise fromthe 12,000 units delivered last year.

Development will reach a cyclical high this year, outpacing strongabsorption and increasing the metro’s vacancy rate to 5.2 percent.

Sub-4 percent vacancy across much of the metro and a wave of newluxury units advance the average effective rent to $2,200 per month.

Sellers obtain premium pricing for post-2000-built properties nearemployment hubs in Santa Monica and Hollywood amid strong jobcreation and rent growth. Comparable product in revitalized areas ofdowntown Los Angeles and Mid-Wilshire will also garner interest frominstitutional buyers.

NMI Rank2, down 1 place

Employmentup 1.2%

Construction17,200 units

Vacancyup 110 bps

Rentup 6.3%

Investment


14618 SYLVAN ST

** Price per unit for apartment properties $1 million and greaterSources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics

AVERAGE PRICE PER UNIT RANGE**(Alphabetical order within each segment)


14618 SYLVAN ST

2018 NATIONAL MULTIFAMILY INDEX

U.S. Multifamily Index

Coastal Markets Top National Multifamily Index;Several Unique Markets Climb Ranks

Trading places. Seattle-Tacoma leads this year’s Index after moving up one notch, driven by robustemployment in the tech sector and soaring home prices that keep rental demand ahead ofelevated deliveries. The metro outperforms last year’s leader, Los Angeles (#2), which slid one spot.Midwest metro Minneapolis-St. Paul (#3) rose one notch as its diverse economy generates steady jobgrowth and robust rental demand, maintaining one of the lowest vacancy rates among larger U.S.markets. San Diego (#4) jumped five spots as deliveries slump while household formation proliferates,resulting in sizable rent growth. Portland (#5) inches up a slot to round out the top five markets. EastCoast markets fill the next two positions: Boston (#6) moves down three slots as rent growth slows whilevacancy ticks up, and New York City (#7) rises three places as stout renter demand holds vacancytight.

Index reshuffles with big moves. Sacramento (#8) posted the largest increase in the Index, vaulting 12positions to lead a string of California markets that fill the next five slots. Robust rent growth and lowvacancy pushed the market up in the ranking. Other double-digit movers were Orlando (#17) andDetroit (#28), which each leaped 10 places. Employment gains and in-migration are generating theneed for apartments in Orlando, maintaining ample rent advancement. In Detroit, steadyemployment and a slow construction pipeline keep demand above supply, allowing rents to flourish.The most significant declines were registered in Austin, Nashville and Baltimore. Austin (#31) tumblednine spaces as elevated deliveries overwhelm demand slowing rent growth. Nashville (#35) andBaltimore (#45) each moved down six steps as demand has yet to absorb multiple years of elevatedinventory gains. Although Kansas City (#46) retains the bottom slot, there is greater change in thelower half of the NMI as more Midwest markets rise.


14618 SYLVAN ST

Growth Cycle Invigorated by Confidence; Tax Laws Could Transform Housing

U.S. ECONOMY

Tight labor market restrains hiring as confidence surges. The steady economic tailwind benefitingapartment performance is poised to carry through 2018 as a range of positive factors align to supportgrowth. Consumer confidence recently reached its highest point since 2000 while small-businesssentiment attained a 31-year record level, both reinforcing indications that consumption and hiringwill be strong. The total number of job openings has hovered in the low-6 million range through muchof 2017, illustrating that companies have considerable staffing needs, but with unemploymententrenched near 4 percent, companies will continue to face challenges in filling available positions.These tight labor conditions should place additional upward pressure on wages, potentially boostinginflationary pressure in the coming year. The strong employment market, rising wages and elevatedconfidence levels could unlock accelerated household formation, particularly by young adults. Lastyear, the number of young adults living with their parents ticked lower for the first time since therecession, signaling that these late bloomers may finally be considering a more independent lifestyle.

Housing preferences may change under new tax laws. The new tax laws could play a significant rolein shaping both the economy and housing demand in 2018. Reduced taxes will be a windfall forcorporations, potentially sparking invigorated investment into infrastructure. The rise in CEOconfidence over the last year already boosted companies’ investment by more than 6 percent,accelerating economic growth. However, the tax incentive-based stimulus will likely offer only amodest bump to GDP in 2018 because corporate investment comprises just 12 percent of economicoutput. One factor that could weigh on economic expansion under the new tax laws is the housingsector, which added just 3 percent to the economy last year, about two-thirds of normal levels. Theincreased standard deduction and restrictions on housing-related deductions will reduce some of theeconomic incentive to purchase a home, further sapping the strength of the housing sector.Nonetheless, the increased standard deduction could benefit apartment investors, encouragingrenters to stay in apartments longer and reducing the loss of tenants to homeownership.

* Forecast** Through 3Q


14618 SYLVAN ST

2018 National Economic Outlook

U.S. ECONOMY

▪ Labor force shortage weighs on job creation. The economy has added jobs every month for morethan seven years, the longest continuous period of job creation on record. The trend will continuein 2018, but the pace of job additions will moderate, falling below 2 million for the year as the lowunemployment rate restricts the pool of prospective employees.

▪ Wage growth poised to accelerate. Average wage growth has been creeping higher in the post-recession era, with compensation gains in construction, professional services and the hospitalitysectors outpacing the broader trend. The tight labor market will continue to pressure wage growth,potentially sparking inflation in the process.

▪ Tax laws could invigorate apartment demand. Since 2011 household formations have outpacedtotal housing construction, a key ingredient in the tightening of apartment vacancies. The new taxlaws could cause homebuilders to reduce construction while shifting a portion of the housingdemand from homeownership to rentals, and a rental housing shortage could ensue. If thisbehavior change occurs in conjunction with additional young adults moving out of their own,apartment demand could dramatically outpace completions.

* Forecast** Through 3Q


14618 SYLVAN ST

Demand Outlook Sturdy as Pace Of Construction Begins to Retreat

U.S. APARTMENT OVERVIEW

* Forecast

Investors wary of apartment construction. The wave of apartment completions entering the market inrecent years has permeated the investor psyche, raising concerns of overdevelopment andescalating vacancy rates, but numerous demand drivers have held this risk in check. Steady jobcreation, positive demographics, above-trend household formation and elevated single-family homeprices have converged to counterbalance the addition of 1.37 million apartments over the last fiveyears, at least on a macro level. Though a small number of markets have faced oversupply risk, theaffected areas tend to be concentrated pockets, with upper-echelon units facing the greatestcompetition. For traditional workforce housing, Class B and C apartments, the risks stemming fromoverdevelopment have been nominal, and in most metros, even the Class A tranche hasdemonstrated sturdy performance. In the coming year, rising development costs, tighter constructionfinancing and mounting caution levels will curb the pace of additions from the 380,000 units deliveredin 2017 to approximately 335,000 apartments. However, the list of markets facing risk from newcompletions will stretch beyond the dozen metros that builders have concentrated on thus far. This willheighten competition, requiring investors to maintain an increasingly tactical perspective integratingvigilant market scrutiny and strong property management.

Competitive nuances increasingly granular. Although the pace of apartment completions willmoderate in 2018, additions will still likely outpace absorption. This imbalance will most substantivelyaffect areas where development has been focused, such as the urban core where vacancy rateshave risen above suburban rates for the first time on record. Nationally, Class A vacancy rates haveadvanced to 6.3 percent in 2017 and will continue their climb to the 6.8 percent range over the nextyear. Vacancy rates for Class B and C assets will rise less significantly in 2018, pushing to 5.0 percentand 4.7 percent, respectively. Although vacancy levels are rising, three-fourths of the major metroshave rates below their 15-year average. Still, the magnitude of new completions coming to marketand the high asking rents these new units command will spark increased competition for tenants,generating a more liberal use of concessions in 2018 as landlords attempt to entice move-up tenants.


14618 SYLVAN ST

2018 National Apartment Outlook

U.S. APARTMENT OVERVIEW

** Estimate

▪ Rent growth tapers as concession use edges higher. Average rent growth will taper to 3.1 percentin 2018 as concessions become more prevalent, particularly in Class A properties. Rent gains in theClass C space, which were particularly strong last year, will face greater challenges as affordabilityrestrains demand. Although job growth has been steady for seven years, wage growth has beenrelatively weak, particularly for low-skilled labor.

▪ Congress may nudge apartment demand. The new tax laws could reinforce apartment living asthe larger standard deduction reduces the economic incentive of homeownership. Previous taxrules encouraged homeownership with itemized deductions for property taxes and mortgageinterest that often surpassed the standard deduction. These advantages have largely beeneliminated, particularly for first-time buyers.

▪ Are millennials finally moving out on their own? The 80 million-strong millennial age cohort, nowpushing into their late 20s, may finally be showing independence. Since the recession, thepercentage of young adults living with their parents increased dramatically, but last year thattrend reversed. Should the share of young adults living with family recede toward the long-termaverage, an additional 3 million young adults would need housing.


14618 SYLVAN ST

Fed Normalization Portends Rising Interest Rates;Capital Availability for Apartments Elevated

U.S. CAPITAL MARKETS

* Through December 12 ** Through December 6

Fed cautiously pursues tighter policies. Investors have largely adapted to the modestly higher interestrate environment, and most anticipate additional increases in 2018 as the Federal Reserve normalizesboth its policies and its balance sheet. The Fed is widely expected to continue raising its overnight ratethrough 2018 as it tries to restrain potential inflation risk and create some dry powder to combat futurerecessions. The Fed will, however, be cautious about pushing short-term rates into the long-term rates,which would create an inverted yield curve. The spread between the two-year Treasury rate and the10-year Treasury rate has tightened significantly, and if the Fed is too aggressive in its policies, theshort-term interest rates could climb above long-term rates. This inversion is a commonly watchedleading indicator of an impending recession. The new chairman of the Fed, Jerome Powell, will likelymake few changes to the trajectory of Fed policies, and he is widely expected to continue thereduction of the Fed balance sheet. Powell may consider accelerating the balance sheet reductionto ensure long-term rates move higher. That said, Powell is widely perceived to be a dovish leaderwho will advance rates cautiously.

Readily available debt backed by sound underwriting. Debt availability for apartment assets remainsabundant, with a wide range of lenders catering to the sector. Apartment construction financing hasexperienced some tightening, a generally favorable trend for most investors. Fannie Mae and FreddieMac will continue to serve a significant portion of the multifamily financing, with local and regionalbanks targeting smaller transactions and insurance companies handling larger deals with low-leverage needs. In general, lenders have been loosening credit standards on commercial real estatelending, but underwriting standards remain conservative with loan-to-value ratios for apartments inthe relatively conservative 66 percent range. An important consideration going forward, however, willbe investors’ appetite for acquisitions as the yield spread between interest rates and cap ratestightens.


14618 SYLVAN ST

2018 Capital Markets Outlook

U.S. CAPITAL MARKETS

▪ Yield spread tightens amid rising interest rates. Average apartment cap rates have remainedrelatively stable in the low-5 percent range for the last 18 months, with a yield spread above the10-year Treasury of about 280 basis points. Many investors believe cap rates will rise in tandem withinterest rates, but this has not been the case historically. Given the strong performance of theapartment sector, it’s more likely the yield spread will compress, reducing the positive leverageinvestors have enjoyed in the post-recession era.

▪ Inflation restrained but could emerge. Inflation has been nominal throughout the current growthcycle, but pressure could mount as the tight labor market spurs rising wages. Elevated wages andaccelerating household wealth could boost consumption, creating additional economic growthand inflation. The Fed has become increasingly proactive in its efforts to head off inflationarypressure, but the stimulative effects of tax cuts could overpower the Fed’s efforts.

▪ Policies likely to strengthen dollar and could pose new risks. One wild card that could create aneconomic disruption is the strengthening dollar. The economic stimulus created by tax cutstogether with tightening Fed monetary policy place upward pressure on the value of the dollarrelative to foreign currencies. This could restrain foreign investment in U.S. commercial real estate,but it could also weaken exports and make it more difficult for other countries to pay their dollar-denominated debt, which in turn weakens global economic growth.

* Through December 12Estimate


14618 SYLVAN ST

Apartment Investors Recalibrate Strategies;Broaden Criteria to Capture Upside Opportunities

U.S. INVESTMENT OUTLOOK

* Through 3Q** Trailing 12 months through 3Q

Appreciation flattens as buyers recalibrate expectations. The maturing apartment investment climatehas continued its migration from aggressive growth to a more stable but still positive trend. Investorshave reaped strong returns in the post-recession era through significant gains in fundamentals andpricing, but the growth trajectory has flattened as the market has normalized. The pace of apartmentrental income growth has moved back toward its mid-3 percent long-term average and investorcaution has flattened cap rates, moderating appreciation. With much of the gains created by thepost-recession recovery absorbed and most of the value-add opportunity already extracted, it hasbeen increasingly difficult for investors to find opportunities with substantive upside potential. At thesame time, apartment construction has finally brought macro-level housing supply and demand backtoward equilibrium, restraining upside potential in markets with sizable deliveries. These challengeshave been compounded by a widened bid/ask gap, with many would-be apartment sellers retaininga highly optimistic perception of their asset’s value. It will take time for investor expectations to realign,but buyers and sellers are discovering a flattening appreciation trajectory. Still, a range ofopportunities remain.

Investors broaden criteria as they search for yield upside. Investors are recalibrating strategies,broadening their search and sharpening their efforts to find investment options with upside potential.They have expanded criteria to include a variety of Class B and Class C assets, outer-ring suburbanlocations, and properties in secondary or tertiary markets. The yield premium offered by these types ofassets has drawn an increasing amount of multifamily capital. In the last year, nearly half of the dollarvolume invested in apartment properties over $1 million went to secondary and tertiary markets, upfrom 42 percent of the capital in 2010. This influx of activity has caused cap rates in tertiary markets tofall from the high-8 percent range in 2010 to their current average near 6 percent. During the sameperiod, national cap rates of Class B/C apartment properties have fallen by 200 basis points to themid-5 percent range. Considering the low cost of capital, these yields have remained attractive toinvestors with longer-term hold plans.


14618 SYLVAN ST

2018 Investment Outlook

U.S. INVESTMENT OUTLOOK

▪ New tax laws could shift investor behavior. Additional clarity on taxes should alleviate some of theuncertainty that held back investor activity over the last year while helping to mitigate theexpectation gap between buyers and sellers. Reduced tax rates on pass-through entities couldspark some repositioning efforts, bringing additional assets to market and supporting marketliquidity.

▪ Tighter monetary policy could narrow yield spreads. Prospects of a rising interest rate environmentcould weigh on buyer activity as the yield spread tightens. Cap rates have held relatively stableover the last two years, and the sturdy outlook for apartment fundamentals is unlikely to changesubstantively in the coming year. As a result, investors’ pursuit of yield will likely push activity towardassets and markets that have traditionally offered higher cap rates.

▪ Transaction activity retreats from peak levels. Apartment sales continued to migrate toward morenormal levels last year as investors’ search for upside and value-add opportunities delivered fewercandidates. Markets with a limited construction pipeline but with respectable employment andhousehold formation growth will see accelerated activity, while markets facing an influx ofdevelopment could see moderating investor interest.

* Through 3Q** Trailing 12 months through 3Q


14618 SYLVAN ST

* Forecast

REVENUE TRENDS

Five-Year Apartment Income Growth by MetroPercent Change 2013-2018*

FIVE-YEAR TREND:Outperforming Through Development Cycle2013-2018*

▪ U.S. creates 11.8 million jobs over five years

▪ Developers add 1.5 million new apartments

▪ Absorption totals 1.4 million apartments

▪ U.S. vacancy rate to match 2013 at 5.0 percent

▪ U.S. average rent rises 23.2 percent


14618 SYLVAN ST

Sources: Marcus & Millichap Research Services; MPF Research

2018 NATIONAL INVENTORY TREND

Five-Year Development Wave Transforms Rental LandscapeInventory Growth 2013-2018

Inventory Change by Market 2013 to 2018


14618 SYLVAN ST

Sources: Marcus & Millichap Research Services; MPF Research

2018 NATIONAL INVENTORY TREND

Largest Growth Five-Year Inventory Change Five-Year Rent Growth

Austin 23.6% 22%

Charlotte 22.9% 30%

Nashville 21.7% 31%

Salt Lake City 20.9% 31%

Raleigh 19.5% 27%

San Antonio 18.7% 20%

Denver 17.9% 41%

Seattle-Tacoma 15.9% 41%

Orlando 15.3% 35%

Dallas/Fort Worth 15.3% 30%

U.S. 9.8% 23%

Top 10 Markets by Inventory Change

Smallest Growth Five-Year Inventory Change Five-Year Rent Growth

Cincinnati 6.6% 24%

Chicago 6.2% 21%

Oakland 5.8% 40%

Riverside-San Bernardino 5.6% 36%

St. Louis 5.5% 14%

Los Angeles 5.4% 31%

New York City 4.6% 15%

Cleveland 4.6% 15%

Sacramento 3.8% 48%

Detroit 2.9% 25%


Source: © 2017 Experian

Created on February 2018

POPULATION 1 Miles 3 Miles 5 Miles

▪ 2022 Projection

Total Population 48,535 303,428 726,958

▪ 2017 Estimate


▪ 2010 Census


▪ 2000 Census


▪ Daytime Population

2017 Estimate 50,966 323,668 679,081

HOUSEHOLDS 1 Miles 3 Miles 5 Miles

▪ 2022 Projection

Total Households 16,069 110,252 252,843

▪ 2017 Estimate


Average (Mean) Household Size 2.97 2.75 2.87

▪ 2010 Census


▪ 2000 Census


Growth 2015-2020 2.12% 2.23% 2.24%

HOUSING UNITS 1 Miles 3 Miles 5 Miles

▪ Occupied Units

2022 Projection 16,069 110,252 252,843

2017 Estimate 16,232 110,561 253,729

Owner Occupied 3,618 34,839 98,281

Renter Occupied 12,117 73,010 149,026

Vacant 497 2,711 6,422

▪ Persons In Units

2017 Estimate Total Occupied Units 15,735 107,849 247,307

1 Person Units 24.83% 27.98% 26.37%

2 Person Units 24.02% 26.98% 26.76%

3 Person Units 17.06% 16.10% 15.68%

4 Person Units 15.46% 13.99% 14.13%

5 Person Units 9.66% 7.76% 8.19%

6+ Person Units 8.95% 7.19% 8.87%

HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles

▪ 2017 Estimate

$200,000 or More 3.78% 6.03% 6.82%

$150,000 - $199,000 3.21% 5.26% 5.34%

$100,000 - $149,000 8.16% 11.71% 12.90%

$75,000 - $99,999 10.57% 11.08% 11.48%

$50,000 - $74,999 17.46% 16.77% 16.87%

$35,000 - $49,999 16.10% 13.91% 13.26%

$25,000 - $34,999 12.76% 10.80% 10.13%

$15,000 - $24,999 14.00% 12.10% 11.17%

Under $15,000 13.96% 12.33% 12.02%

Average Household Income $64,966 $80,934 $86,226

Median Household Income $42,923 $51,056 $54,532

Per Capita Income $21,514 $29,174 $29,655

POPULATION PROFILE 1 Miles 3 Miles 5 Miles

▪ Population By Age

2017 Estimate Total Population 48,373 300,840 722,620

Under 20 26.11% 24.22% 24.40%

20 to 34 Years 26.38% 24.82% 24.36%

35 to 39 Years 7.93% 7.86% 7.58%

40 to 49 Years 14.46% 14.37% 14.23%

50 to 64 Years 16.35% 17.47% 17.70%

Age 65+ 8.76% 11.25% 11.71%

Median Age 33.58 35.59 35.78

▪ Population 25+ by Education Level

2017 Estimate Population Age 25+ 32,013 207,062 495,170

Elementary (0-8) 15.34% 10.84% 11.36%

Some High School (9-11) 10.97% 8.70% 8.94%

High School Graduate (12) 21.74% 20.29% 20.42%

Some College (13-15) 21.19% 19.95% 19.41%

Associate Degree Only 5.51% 6.58% 6.26%

Bachelors Degree Only 15.77% 21.85% 21.28%

Graduate Degree 5.05% 9.02% 9.48%

▪ Population by Gender

2017 Estimate Total Population 48,373 300,840 722,620

Male Population 51.13% 49.59% 49.77%

Female Population 48.87% 50.41% 50.23%


IncomeIn 2017, the median household income for your selectedgeography is $42,923, compare this to the US average which iscurrently $56,286. The median household income for your areahas changed by 37.45% since 2000. It is estimated that themedian household income in your area will be $47,916 five yearsfrom now, which represents a change of 11.63% from thecurrent year.

The current year per capita income in your area is $21,514,compare this to the US average, which is $30,982. The currentyear average household income in your area is $64,966,compare this to the US average which is $81,217.

PopulationIn 2017, the population in your selected geography is 48,373. Thepopulation has changed by 6.88% since 2000. It is estimated thatthe population in your area will be 48,535.00 five years from now,which represents a change of 0.33% from the current year. Thecurrent population is 51.13% male and 48.87% female. Themedian age of the population in your area is 33.58, comparethis to the US average which is 37.83. The population density inyour area is 15,394.90 people per square mile.

HouseholdsThere are currently 15,735 households in your selectedgeography. The number of households has changed by 8.27%since 2000. It is estimated that the number of households in yourarea will be 16,069 five years from now, which represents achange of 2.12% from the current year. The average householdsize in your area is 2.97 persons.

EmploymentIn 2017, there are 21,333 employees in your selected area, this isalso known as the daytime population. The 2000 Censusrevealed that 50.70% of employees are employed in white-collaroccupations in this geography, and 49.06% are employed inblue-collar occupations. In 2017, unemployment in this area is6.28%. In 2000, the average time traveled to work was 35.00minutes.

Race and EthnicityThe current year racial makeup of your selected area is asfollows: 53.30% White, 4.93% Black, 0.11% Native American and5.94% Asian/Pacific Islander. Compare these to US averageswhich are: 70.42% White, 12.85% Black, 0.19% Native Americanand 5.53% Asian/Pacific Islander. People of Hispanic origin arecounted independently of race.

People of Hispanic origin make up 63.50% of the current yearpopulation in your selected area. Compare this to the USaverage of 17.88%.

PROPERTY NAME

HousingThe median housing value in your area was $490,550 in 2017,compare this to the US average of $193,953. In 2000, there were3,646 owner occupied housing units in your area and there were10,888 renter occupied housing units in your area. The medianrent at the time was $571.

Source: © 2017 Experian


37


M A R C U S & M I L L I C H A PWest Los Angeles12100 West Olympic BoulevardSuite 350Los Angeles, CA 90064Main: (310) 909-5500

NON-ENDORSEMENTSMarcus & Millichap hereby advises all prospective purchasers of Net Leased property as follows:

The information contained in this Marketing Brochure has been obtained from sources webelieve to be reliable. However, Marcus & Millichap has not and will not verify any of thisinformation, nor has Marcus & Millichap conducted any investigation regarding these matters.Marcus & Millichap makes no guarantee, warranty or representation whatsoever about theaccuracy or completeness of any information provided.

As the Buyer of a net leased property, it is the Buyer’s responsibility to independently confirm theaccuracy and completeness of all material information before completing any purchase. ThisMarketing Brochure is not a substitute for your thorough due diligence investigation of thisinvestment opportunity. Marcus & Millichap expressly denies any obligation to conduct a duediligence examination of this Property for Buyer.

Any projections, opinions, assumptions or estimates used in this Marketing Brochure are forexample only and do not represent the current or future performance of this property. The valueof a net leased property to you depends on factors that should be evaluated by you and yourtax, financial and legal advisors.

Buyer and Buyer’s tax, financial, legal, and construction advisors should conduct a careful,independent investigation of any net leased property to determine to your satisfaction with thesuitability of the property for your needs.

Like all real estate investments, this investment carries significant risks. Buyer and Buyer’s legaland financial advisors must request and carefully review all legal and financial documentsrelated to the property and tenant. While the tenant’s past performance at this or otherlocations is an important consideration, it is not a guarantee of future success. Similarly, thelease rate for some properties, including newly-constructed facilities or newly-acquired locations,may be set based on a tenant’s projected sales with little or no record of actual performance, orcomparable rents for the area. Returns are not guaranteed; the tenant and any guarantorsmay fail to pay the lease rent or property taxes, or may fail to comply with other material termsof the lease; cash flow may be interrupted in part or in whole due to market, economic,environmental or other conditions. Regardless of tenant history and lease guarantees, Buyer isresponsible for conducting his/her own investigation of all matters affecting the intrinsic value ofthe property and the value of any long-term lease, including the likelihood of locating areplacement tenant if the current tenant should default or abandon the property, and the leaseterms that Buyer may be able to negotiate with a potential replacement tenant considering thelocation of the property, and Buyer’s legal ability to make alternate use of the property.

By accepting this Marketing Brochure you agree to release Marcus & Millichap Real EstateInvestment Services and hold it harmless from any kind of claim, cost, expense, or liability arisingout of your investigation and/or purchase of this net leased property.

R O B E R T N A R C H ISenior Vice President InvestmentsSenior Director National Multi Housing GroupDirect | [email protected]


se u b d u - loopnet · 14618 sylvan st van nuys, ca. location overview. the city of van nuys. van...

Documents