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3/11/14
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Harbor Heights Manor, a 97-unit apartment complex in Santa Barbara, traded hands at a price of $33 mil, or $340k/unit. We’re told that the transaction marks the largest sale of a multifamily property ever recorded in the city of Santa Barbara, and the largest in the South Coast since the Tropicana Gardens in Isla Vista sold for $64.5 mil in 2010.
The property is located at 801 Cliff Dr, just off Loma Alta Dr, between Hwy 101 and the beach. The South Coast market is a 25-mile stretch of pristine coastline in Santa Barbara County that encompasses Isla Vista and the University of California, Santa Barbara at the northern tip, Goleta, Santa Barbara, Montecito, Summerland and Carpinteria.
Harbor Heights Manor, which occupies a sizable footprint on the doorstep of Santa Barbara City College—ranked the top community college in the nation in 2013 by the Aspen Institute—went on the market last August and quickly garnered numerous inquiries and more than a dozen offers from prospective buyers around the country.
The winning bidder, a local investor who was unnamed, entered into contract above asking price with no contingencies. Escrow closed in late January just five short months after the property was listed.
Brokers Steve Golis and Brian Johnson with Radius Commercial Real Estate & Investments represented both the buyer and the sellers, long-time Santa Barbara residents the Schulte family.
According to Golis, one compelling market factor continues to be the strength of U. C. Santa Barbara and Santa Barbara City College. “Our vacancy for rental properties is one of the lowest in the country, just below 1%,” he said. “Population density, particularly in Isla Vista, is one of the tightest in the country, rivaling Manhattan. This adds up to incredible opportunity for substantial return on long-term investments in the area.”
In fact, the only thing that may quell the tide of apartment sales in the South Coast could be a scarcity of inventory. “We have seen more and more commercial real estate investors turn their attention from office, retail or industrial properties, so the competition for multifamily has been fierce,” said Golis.
According to Radius, multifamily transactions in the South Coast reached a six-year high in 2013 with 22 sales of properties larger than five units and seven sales in the fourth quarter alone. This despite recent interest rate increases, bolstering the belief that demand for multifamily property in the market can withstand minor upward changes in interest rates.
Prior to the Harbor Heights deal, recent high visibility sales in the market included the 63-unit New Tahitian Apartments in June for $14.3 mil, also handled by Golis and Johnson, and the September sale of the new luxury complex The Loop for $29.3 mil. Both properties enjoy close proximity to U.C.S.B. in Isla Vista.
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