Dunleer’s Turner: Highland Park’s Charm, Location & Zoning Appeals to Investors
BJ Turner
Los Angeles-based private real estate investment and development firm Dunleer recently completed a pair of deals in the Highland Park neighborhood of Los Angeles. That included the $2.375-million sale of The Abbott, a fully occupied six-unit apartment property located at 400 N Avenue 54, as well as the $3.222-million sale of The Cottage Club, an iconic rental community consisting of eight stand-alone cottages located at 336 N Avenue 57.
Connect Media’s Dennis Kaiser asked Dunleer’s BJ Turner to share more about what attracts them to this submarket between DTLA and Pasadena, and discusses investment plans for the firm moving forward in our latest 3 CRE Q&A.
Q: What has been the appeal of Highland Park for apartment investors?
A: Highland Park is situated between downtown L.A. and Pasadena, offering quick access to both via the Metro Gold line and the 110 freeway. It has two high-profile retail corridors on Figueroa and York that offer walkable vibrant boutiques, cafes, restaurants and bars. Much of Highland Park is in an Historic Preservation Overlay Zone (HPOZ) which keeps the charm and character of the neighborhood. The largest of the city’s HPOZs, Highland Park-Garvanza, encompasses approximately 4,000 structures (including over 50 Los Angeles City Historic-Cultural Monuments) and was the first HPOZ to include commercial buildings. New building supply is kept in check as the HPOZ makes demolition of old buildings challenging and the prevalent zoning has a condition (a “Q condition”) that downzones most new supply. For obvious reasons, apartment buyers are attracted to markets with growing demand and supply that remains in check.
Q: Are you looking to acquire more properties in this submarket?
A: Definitely — the tenants we’ve had have been terrific, the walkability is outstanding, the retail is some of the best in Los Angeles, and it is charming without being too dense. It’s a true melting pot of all that makes L.A. great.
Q: How has the pandemic affected your business model and investment plans moving forward?
A; At the property level, we are rethinking how we design our common areas and unit floorplans. With the increase in work-from-home protocol, we will likely start to add offices / dens that someone can either work from or perhaps utilize as a workout studio — for example, they can furnish it with an exercise bike and yoga mat.
As to a broader investment strategy, we are going to over or underweight our allocations to certain jurisdictions, given the regulatory framework property owners have been exposed to in the pandemic. We will continue to look for properties near creative office campuses that have companies focused on content creation, as we think there will be a heightened demand for this industry post-COVID.
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