CBRE announced the sale of Sterling Plaza Apartments, a 12-unit multifamily community at 2607 Solana Way in Laguna Beach, California.
CBRE’s Executive Vice President Dan Blackwell and Senior Vice President Mike O’Neill represented the San Francisco Bay Area-based seller. Blackwell and O’Neill also represented the buyer, a repeat client from Los Angeles County.
“Sterling Plaza Apartments is a one-of-a-kind, highly recognizable property several stories high situated along Coast Highway in Laguna Beach, one of the most highly coveted rental markets in all of California,” said O’Neill. “This prime location offers great ocean views from every unit plus convenient access to beaches and all that Laguna Beach and South Orange County has to offer.”
According to Blackwell, “The property had been owned by the same family for over 40 years, passed down through generations. The ownership was aware of CBRE Multifamily SoCal Team’s active presence in the Laguna Beach market and reached out to us when it was time to sell.”
O’Neill continues, “Our marketing process generated multiple tours and competitive offers through our investor network. We selected the right buyer for the seller, whose goal was to exchange into a DST (Delaware Statutory Trust) for a more passive investment. The seller had been self-managing the property and had recently invested in a new roof, electrical upgrades, and seismic improvements. Eight of the 12 units have been recently renovated.”
Built in 1962 and 1963, Sterling Plaza Apartments features three levels of residential totaling 9,823 square feet of rentable space on a 12,577-square-foot lot (0.29 acres) at 2607 Solana Way. There are one- and two-bedroom floor plans, including a two-bedroom penthouse. All units enjoy unobstructed ocean views and their own private balcony. Four of the one-bedroom units have floor-to-ceiling windows across the entire length of the unit. The penthouse unit has a large balcony with panoramic views of the Pacific Ocean. The property also has 14 parking spaces (11 carports plus three open spaces). There is an onsite community laundry facility, and the units are individually metered for electricity.
“Sterling Plaza Apartments is surrounded by multi-million-dollar homes, some of the best luxury single-family real estate in all of Orange County,” highlighted O’Neill. “Residents are within walking distance to Arch Beach, Mermaid Beach and Victoria Beach, and the Montage Laguna Beach hotel is just a little further south.”
More than 27,796 people reside within a three-mile radius, with an average household income exceeding $227,280.
O’Neill added, “The current cap rate is 3.69%, but the buyer recognized the significant upside potential of this outstanding property. They plan to renovate the interiors with high-end finishes to achieve premium rents and a cap rate of 4.93%. Additionally, the buyer intends to add one or two accessory dwelling units (ADUs) to the property to increase their cash flow.”
“We are continuing to see a significant number of investors wanting to invest in Laguna Beach multifamily properties,” said Blackwell. “Some of these investors live nearby or elsewhere in the state or outside of California, but they all want to invest in one of the region’s most desirable markets.”
O’Neill noted that Laguna Beach is one of the densest communities in Orange County. “Approximately 3,000 residents live on just 0.2 square miles giving it a population density of 17,621 people per square mile—higher than that of San Francisco,” O’Neill said. “Laguna Beach is one of the most expensive real estate markets in North America outside of Lower Manhattan, with water view homes selling for north of $3 million.”
