When it comes to land transactions, it’s the broker’s job to sell the "vision." How well that vision is sold makes the difference in getting to the highest land value for the seller. To Moran & Company, it's not just a piece of dirt, our team ensures that prospective buyers see today's development sites as tomorrow's landmark residential communities.
South Vermont was a 4.7 acre development site in Torrance, California, entitled for a 246-unit wrap project. Shea Properties owned the site and engaged Moran & Company in 2013 to market the site for sale.
At a time when the broader economy was still in recovery, recognizing the opportunity for rent growth in Torrance, and the South Bay submarket more broadly, was challenging to say the least. The South Bay was a submarket that had not seen new apartment delivery in 40 to 50 years and at first glance, it would be easy to conclude that the lack of new development was a function of the lack of demand and demographics to support new product. The marketing window for the site was less than ideal. Just getting to the site, investors had to drive through older, low-rise industrial parks and past 40-year-old ranch style homes that make up the vast majority of the South Bay landscape.
The opportunity for investors was in looking past the older neighborhood and seeing (1) the enormous job story (the South Bay is home to more 450,000 jobs and the site was within two miles of white collar jobs at Harbor-UCLA Medical Center, Kaiser Permanente Harbor City Hospital and at the time, the American headquarters of Honda and Toyota), and (2) the high home prices (the 40-year-old ranch homes surrounding the property boasted an average home price in the $400,000's). Moreover, rather than look at the older neighborhood as indicative of a lack of demand, investors had to recognize that the lack of new product was really function of high barriers to entry - an infill market with a deeply vocal anti-development sentiment.
The key to getting investors past their South Bay bias was in reframing the context of South Vermont. Rather than a stagnant submarket, the Moran Team showed why the South Bay was a market totally overlooked by the investment community and massively underserved by new product. For example, the South Bay is home to a resident base of 800,000 people with, at the time, only 200-units in the pipeline or to coin a new metric, 4,000 residents per new class A unit (or 4,000:1 RPU). In comparison, submarkets like Marina del Rey or Downtown LA were home to a fraction of the residents but a multiple of new product, 11:1 and 7:1 RPU respectively. This same analysis was applicable to the jobs context as well. With 450,000 jobs in the South Bay, the jobs per unit metric or (JPU) was 2,250:1, compared to several orders of magnitude lower in Downtown LA and Marina del Rey. In this context, we were able to quantify for investors the deeply underserved nature of the South Bay.
We closed South Vermont in 2013 and in 2015 Wood Partners and AIG delivered Alta South Bay with resounding success. Alta South Bay leased up in less than one year, with an average lease-up velocity of 30 units/month. Moreover, as further indication of the deeply unmet demand, lease-up rents for the property were over 10% higher than pro forma rents with stabilized rents demonstrating even stronger demand.