More Residential Conversions on Tap for Long Beach, California
Irvine, CA (February 23, 2022) – The office property at 6700 E. Pacific Coast Highway in Long Beach, California, may soon be converted into residential space. It sits next to Marina Shore, a retail property that's also expected to become apartments. (CoStar)
By Jack Witthaus
With demand up for housing and down for offices, it appears the end is near for a nearly 40-year-old office property in Long Beach, California.
Holland Partner Group, based in Vancouver, Washington, bought the 77,000-square-foot 6700 E. Pacific Coast Highway for $41 million, or about $532 per square foot, and, according to the seller, plans to convert the property to residential use.
The deal would be the latest real estate conversion project in the works in the Marina neighborhood. The seller of the 2.5-acre property was Irvine, California-based ValueRock Realty Partners.
The sale price was well above average for the downtown Long Beach office market, where properties on average sell for $273 per square foot, according to CoStar data. The 38-year-old complex, called Congressional Place, last sold in January 2017 for $24 million, according to CoStar data.
The buyer did not respond to a request for comment, and further details on the size and scope of the residential conversion weren't immediately known. Dennis Vaccaro, senior vice president of ValueRock, told CoStar News that Atlanta investment management firm Invesco also was involved in the purchase of Congressional Place, but no details were available.
"We greatly support the city of Long Beach's vision of redevelopment and are excited to select Holland and Invesco to develop this property," Vaccaro said. "We saw this as an excellent opportunity to sell the property based on its underlying land value as a potential future residential development."
Holland Partner Group is not the only firm to see opportunity in conversions in the neighborhood. Onni Group, based in Vancouver, British Columbia, bought the nearby 68,000-square-foot Marina Shores for $68 million in November 2021 and plans to convert the property into apartments. That property is adjacent to the Congressional Place offices. The potential Long Beach apartment conversions would come to a market with a vacancy rate of 3.2%, below the greater Los Angeles average of 3.5%, according to CoStar data. In addition, the market's average monthly rent is $1,746, below the greater L.A. average of $2,115.
Meanwhile, the office vacancy rate in downtown Long Beach is 15.1%, slightly higher than the greater L.A. average of 13.8%, according to CoStar data.
Both sites are in Long Beach's Southeast Area Specific Plan, or SEASP, which promotes redevelopment opportunities of some properties on the city's southeast side facing the Pacific Ocean, according to city documents. The neighborhood typically has higher housing values than the city's average and is expected to grow by 1,600 to 2,900 households by 2035. The roughly 1,400-acre area is south of Seventh Street and of Colorado Street, east of Bellflower Boulevard and the Long Beach Marine Stadium and Alamitos Bay docks, and north and west of Long Beach’s southern boundary, according to city of Long Beach documents.
This year, redevelopment projects were expected to add 53,000 housing units nationwide, with office buildings being the most popular product type targeted for conversions, according to RentCafe, a Santa Barbara, California based apartment data service. Holland Partner Group owns at least 27 properties in greater Los Angeles, including more than 86,000 square feet of office space and more than 1,000 apartment units, according to CoStar research.
About ValueRock: ValueRock Realty is a national leading retail and mixed-use real estate investment and operating company based in Irvine, Calif. With almost 30 years of operation, the company brings a track record of $30 billion in transactions in investment management, asset management, financing, development, leasing, and operations. The company’s vision is to bring cutting edge, multi-disciplinary capabilities through re/development to create new visionary uses and a sense of place for the Community through optimal mixed-use environments to maximize value.