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Santa Monica Rent Controlled Building Sells for Record $330 Million
By Jorge Casuso
May 23, 2022 -- The former Champagne Towers -- a half-century-old rent control apartment complex -- has sold for $330 million, making it the most expensive apartment sale in Santa Monica history.
According to the Los Angeles Business Journal, Santa Monica-based Douglass Emmett purchased the 120-unit complex at 1221 Ocean Avenue from Newport Beach-based Irvine Co., for an average of $2.75 million a unit.
Built in 1971 by a development firm controlled by the late bandleader Lawrence Welk, the complex has been home to celebrities from Britney Spears to Larry David.
Monthly rents at the 16-story oceanfront complex range from $2,408 per month to $41,675, according to the maximum allowable rents listed on the City's Rent Control site.
A total of 46 units listed for less than $10,000 per month, with 68 units renting for between $10,000 and $20,000 per month.
Amenities include a rooftop, ocean view pool and spa; on-site 24/7 guest concierge service; a rooftop lounge and valet parking, according to Apartments.com.
Owners of rent control buildings in California can raise rents to market rates under the 1995 Costa Hawkins Rental Act, which went into full effect in 1999.
As a result, the prices of rent control units in Santa Monica have skyrocketed.
“It’s very hard to build that kind of product and you can set your own rents when you have that kind of fully amenitized housing that competes with single family and even kind of surpasses single family,” Dean Zander, executive vice president at CBRE Group Inc., told the Business Journal.
According to the brokerage, Santa Monica/Marina del Rey had the highest average rent of any submarket, with rents in the first quarter averaging nearly $3,686 a month.
According to Douglas Emmett, the 1221 Ocean Avenue property is 98 percent leased, and units are an average size of 1,500 square feet.
"Kevin Crummy, the company’s chief investment officer, said during the earnings call that the company would continue a major renovation on the project," the Journal reported.
"The renovations include upgrading the units and the common areas."
Irvine Co. reportedly paid $44.1 million for the property in 1998 and completed a $90 million retrofit/remodeling in 1999 after the complex was badly damaged in the 1994 Northridge earthquake.
The 51-year-old apartment complex closed for remodeling in 2015, causing a brief pause in the average cost of an apartment in Santa Monica's red-hot rental market.
The 1221 Ocean Avenue property is the second most expensive commercial real estate sale in the city's history, according to data from Commercial Real Estate Exchange Inc., or Crexi, cited by the Journal.
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