After 'Unprecedented Growth,' Long Beach Works To Weather The Pandemic
Prior to the coronavirus pandemic, the city of Long Beach was seeing “unprecedented growth,” Long Beach Deputy Director of Economic Development Sergio Ramirez said. In 2019, the city had an estimated $5B worth of public and private investment taking shape, more than 5,000 units underway and almost 13,000 building permits approved — a record for the city, he told attendees at a recent Bisnow digital event on Long Beach development.
But like most every other city in the state, Long Beach saw a slowdown with the onset of the pandemic, a number of experts across asset classes in the city conceded, and it has been treading water. Still, there were a few bright spots.
Long Beach’s multifamily market is still strong in terms of demand, AndersonPacific Executive Vice President Ryan Altoon said. “What we’ve seen in terms of rental rates is that most have been holding, and actually, downtown Long Beach is faring even better than downtown Los Angeles [in occupancy and rent collection].”
An occupancy success story played out in the thick of the pandemic with a building Ensemble Real Estate Solutions & Investments opened in Long Beach in March 2020. With the help of a lot of virtual leasing efforts, the building is now over 80% leased, Ensemble principal Tyson Sayles said. Ensemble has a number of projects in the Bay Area, and those rents are down almost 20%, Sayles said, but the rent reductions and collection issues aren’t present in their Long Beach properties to the same degree.
A report from the Downtown Long Beach Alliance, a business improvement district, found that the concession rate for multifamily properties more than doubled between Q4 2019 and Q4 2020, but that amounted to a concession rate of 1.32%. Total occupancy was at 93%.
The picture for Long Beach office space, on the other hand, was less rosy. The overall vacancy rate for Long Beach office space increased from 18.7% to 19.2% quarter-over-quarter in the downtown area and increased 0.6% to 13.8% in the suburban market, the Long Beach Post reported in August.
Coldwell Banker Commercial Associate Vice President Sheva Hosseinzadeh said she interacted with tenants who still want an office but are downsizing. Waterford Property Co. President John Drachman agreed that many office tenants in Long Beach don’t seem to be interested in expanding their footprint.
“It’s a lot of downsizing, it’s a lot of rightsizing [and], to be honest, it’s a lot of tenants that don’t really know what the world looks like — don’t have a good grasp of, once we’re out of this pandemic, what their office space needs are going to look like,” Drachman said.
Despite a commercial real estate landscape that is still very much trying to hold its own in the face of the pandemic, the panelists said they remained bullish on Long Beach's future, in part because of its location.
“[Downtown] Long Beach is one of the few urban downtowns on the waterfront on the West Coast," Altoon said. "It's an attainable, accessible waterfront urban community that's not at San Francisco-level prices."