permit ready 60-unit multi-family site · information provided. all potential buyers must take...

INDIO, CA

Permit Ready 60-UnitMulti-Family Site

OFFERING MEMORANDUM

CONFIDENTIALITY AND DISCLAIMER

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

INDIO, CA

Permit Ready 60-Unit Multi-Family Site

Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOURMARCUS & MILLICHAP AGENT FOR MORE DETAILS.

NON-ENDORSEMENT NOTICE

Section 1 PROPERTY DESCRIPTION

Section 2 PROJECT DETAILS

Section 3 CITY OF INDIO

Section 4 PRICING AND FINANCIAL ANALYSIS

Section 5 RECENT SALES

Section 6 RECENT SALES - EXISTING MULTI-FAMILY BUILDINGS

Section 7 RENT COMPARABLES - MULTI-FAMILY

Section 8 MARKET OVERVIEW

Section 9 DEMOGRAPHIC ANALYSIS

TABLE OF CONTENTS



INDIO, CA

PROPERTY DESCRIPTION

Marcus & Millichap is pleased to offer for sale the fully entitled and permit ready 60-unit multi-family residential development site located on Avenue 44 just west of Jackson Street in the booming city of Indio. This development opportunity will be delivered with all final city approvals for the construction of 60 residential units in six separate buildings along with a full set of blueprints for the development. Fully entitled “shovel-ready” projects are very difficult to find in Southern California and this property is very well positioned to take full advantage of the exploding Indio multi-family apartment market.

SiteThe site is rectangular in shape with ±836’ of frontage along Avenue 44 with a depth of ±286’. The topography of the site is flat and all of the utilities are to the site. The neighborhood surrounding the subject property is primarily single family residential in nature with a few small retail strip centers and several schools (there are three elementary schools located within blocks of the subject property). There is a large parcel of city-owned vacant land directly to the south of the subject along with a number of well-maintained office/industrial buildings as well. The property is located on Avenue 44 just west of Jackson Street and is only two blocks to the south of the I-10 freeway. Access to the freeway and access to downtown Indio isexcellent.

Unit Mix/AmenitiesAll 60 units in this development are designed to be 2 bedroom - 2 bath units of 1,050 square feet. Twelve of the units are scheduled to be ADA-compliant. Each unit will also have an attached 2-car garage along with either a private patio or balcony. Amenities will include a club house, a gymnasium with shower facilities, a swimming pool with a Jacuzzi, barbeque and play areas with equipment.

City of IndioKnown as the “City of Festivals”, Indio and the Coachella Valley submarket of the Inland Empire is the fastest growing submarket in the State of California, and is also one of the four fastest growing regions in the entire US. The population in the City of Indio has grown by 50% since the year 2000 and the city has the highest projected population growth in the Coachella Valley over the next 10 years with nearly 30,000 additional residents projected to live in the city by 2025. This is a huge advantage for the local apartment market as Indio apartment vacancies currently average in the 2% range with rental rates that are on the rise.

The OpportunityThis is one of those rare opportunities where a builder can almost immediately begin to work on the project. Final approvals have already been granted and the seller just paid $50,000 to obtain the grading permit. This will enable a builder to start working on this development in a very short time period.

Investment Highlights

■ Permit Ready 60-Unit Multi-Family Residential Development Opportunity

■ Final Approvals for the Project have been Granted by the City of Indo - Sellerwill Deliver Full Set of Blueprints

■ Seller Just Paid $50,000 to Obtain Grading Permit

■ All Units are to be 2 Bedroom-2 Bath Units of 1,050 SF

■ ±5.5 Acre Flat Rectangular Site with All Utilities to Site

■ Booming Demand for Multi-Family Housing in Indio with Very Little NewDevelopment to Meet Demand

1


Permit Ready 60-Unit Multi-Family SiteINDIO, CA

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as tothe accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for anyinaccuracies. Marcus & Millichap is a trademark of Marcus & Millichap Real Estate Investment Services, Inc. © 2017 Y0100319 Marcus &Millichap. All rights reserved.

INVESTMENT OVERVIEW

2




PROPERTY PHOTOS

3




PROPERTY PHOTOS

4




PROPERTY PHOTOS

5




PROPERTY PHOTOS

6




NEIGHBOR (WEST): RIVER OF LIFE CHURCH

7




NEIGHBOR (EAST): INDIO VILLAGE SQUARE

8




NEIGHBOR (SOUTH): INDUSTRIAL

Local Map Regional Map

9




AREA MAPS

10




PLAT MAP

11




AERIAL PHOTO

12




AERIAL PHOTO


INDIO, CA

PROJECT DETAILS

14

PROJECT DETAILS



RENDERINGS

15

PROJECT DETAILS



RENDERINGS

16

PROJECT DETAILS



SITE PLAN

17

PROJECT DETAILS



SITE PLAN

18

PROJECT DETAILS



SITE PLAN

19

PROJECT DETAILS



BUILDING DETAILS

20

PROJECT DETAILS



ELEVATIONS

21

PROJECT DETAILS



TYPICAL FLOORPLANS

22

PROJECT DETAILS



CONTACT LIST

ELECTRIC

Southern Cal Edison

1700 E. Tahquitz Canyon Way

Palm Springs, CA 92262

Phone: (800) 655‐4555

GAS

Southern California Gas Company

211 N. Sunrise Way


Phone: (760) 674‐0290

SANITARY SEWER

Coachella Valley Water District

75‐525 Hovley Lane East

Palm Desert, CA 92260

Phone: (760) 398‐2651

TELEPHONE

Verizon California

295 N. Sunrise Way


Phone: (800) 483‐1000

WATER

Coachella Valley Water District

75‐525 Hovley Lane East


Phone: (760) 398‐2651

BUILDING

AGC Design Concept

Valencia, CA

STRUCTURAL

AGC Design Concept

Valencia, CA

PLUMBING/MECHANICAL/ELECTRICAL

Perfect Design and Engineering

Alhambra, CA

LANDSCAPING

George P. Parisi & Associates

Hacienda Heights, CA

SOILS ENGINEER

Geo‐Cal, Inc.

San Bernardino, CA


INDIO, CA

CITY OF INDIO

24

CITY OF INDIO



TRADE AREA MAP

25

CITY OF INDIO



POPULATION & PROJECTED GROWTH

26

CITY OF INDIO



INDIO DEVELOPMENT ZONES

27

CITY OF INDIO



CITY OF INDIO ADVANTAGES

28

CITY OF INDIO



ONLY IN INDIO


INDIO, CA

PRICING AND FINANCIAL ANALYSIS

30

PRICING AND FINANCIAL ANALYSIS


Summary

Property Permit Ready 60-Unit Multi-

Property Address Avenue 44 at Towne Street

Indio, CA 92201

Price $1,495,000

Down Payment 100% / $1,495,000

Lot Size (SF) 239,580

Price/SF $6.24

Lot Size (Acres) 5.5000

Price/Acre $271,818

Buildable SF 239,580

Price/Buildable SF $6.24

Number Of Units 60

Price/Unit $24,917

Lot Dimensions 836' x 237'

Type of Ownership Fee Simple


Site Description

Assessor's Parcel Number 611-125-006 & 007

Frontage 836' on Avenue 44

Utilities To Site

Traffic Counts 7,800 (2010)

Adjacent Development SFR Residential

Financing

FIRST TRUST DEED

Loan Type All Cash

FINANCIAL OVERVIEW


INDIO, CA

RECENT SALES

1)

2)

3)

4)

5)

6)


34th Avenue at Tahquitz Creek

1550 Amado Road

Auto Center Drive at Adams Street

Mirabella Drive at Madera Court

S Palm Canyon at Mesquite Avenue

2355 Cantina Way

32

RECENT SALES



RECENT SALES MAP

0.00

2.00

4.00

6.00

8.00

10.00

12.00

Subject 34thAvenue

atTahquitz

Creek

1550AmadoRoad

AutoCenterDrive

atAdamsStreet

MirabellaDrive

atMaderaCourt

SPalm

Canyonat

MesquiteAvenue

2355Cantina

Way

AVERAGE PRICE/ACRE

0

100,000

200,000

300,000

400,000

500,000

600,000

Subject 34thAvenue

atTahquitz

Creek

1550AmadoRoad

AutoCenterDrive

atAdamsStreet

MirabellaDrive

atMaderaCourt

SPalm

Canyonat

MesquiteAvenue

2355Cantina

Way

33

RECENT SALES


AVERAGE PRICE/SF


PRICE PER SF AND PRICE PER ACRE

1

2

Comments

This site was entitled with a TTM for 41 detached condiminium units. The land is relatively flat and all utilities are near

the site. Based on 41 condos, this property sold at $50,000 per lot.

34th Avenue at Tahquitz Creek


1550 Amado Road


Comments

This property had previously been entitled for 38 units with units ranging from 1,399 SF to 1,604 SF for 2bd/2ba units.

This property sold at a price of $34,210 per unit.


Avenue 44 at Towne Street

Indio, CA 92201

Subject Property

Close of Escrow: 1/9/2015 Lot Size (SF): 331,056

Sale Price: $2,050,000 Price/SF: $6.19

Down Payment: $41,000 Lot Size (Acres): 7.6000

Down Payment %: 2% Price/Acre: $269,737

Zoning: WRGA6 Lot Dimensions: Irregular

34



Down Payment: $1,300,000 Lot Size (Acres): 2.8000


Zoning: MR Lot Dimensions: Irregular

RECENT SALES



RECENT SALES

Sale Price: $1,495,000 Lot Size (SF): 239,580

Down Payment: $1,495,000 Price/SF: $6.24

Down Payment %: 100% Lot Size (Acres): 5.5000

Zoning: Price/Acre: $271,818

Lot Dimensions: 836' x 237'

3

4

5

Mirabella Drive at Madera Court

Indio, CA 92203

S Palm Canyon at Mesquite Avenue


Comments

This sale took place in Indio in 2016 and given that this site was for 81 SFR finished lots this transaction is for a

different product type than the subject property.

Comments

This site was to be developed as 56 single family homes and 25 multi-famiily units.

Auto Center Drive at Adams Street

La Quinta, CA 92253

Comments

This property was purchased by a buyer who intends to entitle the property for a mixed-use development with a

commercial and residential component.





Zoning: RL Lot Dimensions: Irregular

35





Zoning: Regional Lot Dimensions: Irregular

RECENT SALES






Zoning: R3 Lot Dimensions:


RECENT SALES

62355 Cantina Way


Comments

This site was entitled to build 15 condminiums with a price/unit of$33,333 per unit.


Sale Price: $500,000 Price/SF: $9.04

Down Payment: $500,000 Lot Size (Acres): 1.2700


Zoning: R2 Lot Dimensions: 316' x 175'

36

RECENT SALES



RECENT SALES


INDIO, CA

RECENT SALES - EXISTING MULTI-FAMILY BUILDINGS

1)

2)

3)

4)

5)

6)

7)

8)


Villa Del Sol Apartments

Desert Oasis Apartments

33350 Cathedral Canyon Drive

73881 Fred Waring Drive

44220 San Pablo Avenue

39950 Bird Lane

Ocotillo Place Apartments

Monta Vista

38

RECENT SALES - EXISTING MULTI-FAMILY



RECENT SALES MAP

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

VillaDelSol

Apartments

DesertOasis

Apartments

33350CathedralCanyon

Drive

73881Fred

WaringDrive

44220San

PabloAvenue

39950BirdLane

Average Cap Rate

39




CAP RATE AND GRM

Average Price per Square Foot

Average Price per Unit

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

VillaDelSol

Apartments

DesertOasis

Apartments


Drive

73881Fred

WaringDrive

44220San

PabloAvenue

39950BirdLane

OcotilloPlace

Apartments

MontaVista

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

VillaDelSol

Apartments

DesertOasis

Apartments


Drive

73881Fred

WaringDrive

44220San

PabloAvenue

39950BirdLane

OcotilloPlace

Apartments

MontaVista

40




PRICE PER SF AND PRICE PER UNIT

46211 Jackson Street

No. of Units: 90 Units Unit Type

Year Built: 1974 4 1 Bdr 1 Bath

Sale Price: $11,000,000 28 2 Bdr 1 Bath

Price/Unit: $122,222 48 3 Bdr 2 Bath

Price/SF: $130.86 10 4 Bdr 2 Bath

CAP Rate: 4.75%

GRM:

Villa Del Sol Apartments

43095 Washington Street




Sale Price: $5,400,000

Price/Unit: $168,750

Price/SF: $140.91

CAP Rate: 5.00%

GRM:

Comments

This property qualifies for the Low Income Housing Tax Credit.

Close of Escrow: June 2017

Close of Escrow: April 2017



Indio, CA 92201


Year Built:


Price/Unit:

Price/SF:

CAP Rate:

GRM:

Comments

Subject Property

1

2 Desert Oasis Apartments

46211 Jackson Street

Indio, CA 92201

41

Comments




RECENT SALES

Close of Escrow: March 2017


Year Built: N/A 8 2 Bdr 2 Bath



Price/SF: $159.53

CAP Rate: 5.00%

GRM:

Comments


Year Built: N/A



Price/SF: $75.72

CAP Rate: 7.38%

GRM:

33350 Cathedral Canyon Drive

Cathedral City, CA 92234



44220 San Pablo Avenue


Comments


Year Built: N/A 12 2 Bdr 2 Bath Twnhs



Price/SF: $129.12

CAP Rate: 5.05%

GRM:

Comments

Close of Escrow: February 2017

Close of Escrow: February 2017

3

4

5

42




RECENT SALES





Price/SF: $176.52

CAP Rate: N/A

GRM:




Price/Unit: $125,000 2 3 Bdr 2 Bath

Price/SF: $107.84

CAP Rate: 5.51%

GRM:

39950 Bird Lane

Rancho Mirage, CA 92270

Ocotillo Place Apartments

69155 Dinah Shore Drive

Cathedral City, CA 92234

Monta Vista

40235-40255 Harris Lane


Comments





Price/SF: $105.36

CAP Rate: N/A

GRM:

Comments

Close of Escrow: January 2017



Comments

6

7

8

43




RECENT SALES


INDIO, CA

RENT COMPARABLES - MULTI-FAMILY

1)

2)

3)

4)

5)

6)

7)

8)

9)


Indigo Views

Desert Villa

Los Arboles

Sun Gold Apartments

Las Palmas Apartments

Valley Plaza Apartments

Park View Apartments

Ave 44 Apartments

Palo Verde Apartments

45




RENT COMPARABLES MAP

Average Occupancy

0

10

20

30

40

50

60

70

80

90

100

IndigoViews

DesertVilla

LosArboles

SunGold

Apartments

LasPalmas

Apartments

ValleyPlaza

Apartments

ParkView

Apartments

Ave44

Apartments

PaloVerde

Apartments

0

100

200

300

400

500

600

700

800

LosArboles

SunGold

Apartments

LasPalmas

Apartments

ValleyPlaza

Apartments

ParkView

Apartments

Average Rents - 1 Bedroom

46




OCCUPANCY AND AVERAGE RENTS

2 Bdr

0

200

400

600

800

1,000

IndigoViews

DesertVilla

LosArboles

SunGold

Apartments

LasPalmas

Apartments

ValleyPlaza

Apartments

ParkView

Apartments

Ave44

Apartments

PaloVerde

Apartments

Average Rents - 2 Bedrooms

47




3 Bdr

0

200

400

600

800

1,000

1,200

SunGold

Apartments

PaloVerde

Apartments

Average Rents - 3 Bedrooms

AVERAGE RENTS

Subject Property

Comments

Comments

1

Comments

No. of Units

Occupancy:

Year Built:



Indio, CA 92201

No. of Units 52

Occupancy: 94%

Year Built: 1987

No. of Units 64

Occupancy: 100%

Year Built: 1967

Indigo Views


Indio, CA 92201

Desert Villa

46695 Desert Villa Street

Indio, CA 92201

Unit Type Units SF Rent Rent/SF

2 Bdr 2 Bath 26 980 $975 - $1,000 $1.01

2 Bdr 2 Bath Villa 26 1,060 $1,050 - $1,075 $1.00

Total/ Avg. 52 $1,024 $1.01


2 Bdr 1 Bath 32 910 $805 $0.88

2 Bdr 1.5 Bath 32 988 $953 $0.96

Total/Wtd. Avg. 64 $879 $0.93

2

48



Unit Type Units

60 2 Bdr 2 Bath

Total/Wtd. Avg.


RENT COMPARABLES

No. of Units 80

Occupancy: 100%

Year Built/Renovated: 1974

Los Arboles

81860 Shadow Palm Avenue

Indio, CA 92201

No. of Units 12

Occupancy: 100%


No. of Units 37

Occupancy: 100%


Sun Gold Apartments

44651 Sun Gold Street

Indio, CA

Las Palmas Apartments

81871 Las Palmas Road

Indio, CA 92201

Comments

Comments

Comments


1 Bdr 1 Bath 3 650 $650 $1.00

2 Bdr 1 Bath 7 800 $714 $0.89

3 Bdr 2 Bath 2 945 $963 $1.02

Total/Wtd. Avg. 12 $775 $0.94


1 Bdr 1 Bath 24 730 $700 $0.96

2 Bdr 1 Bath 40 930 $750 $0.81

2 Bdr 2 Bath 36 1,000 $795 $0.80

Total/Wtd. Avg. 100 $748 $0.83


1 Bdr 1 Bath 12 675 $800 $1.19

2 Bdr 1.5 Bath 25 902 $930 $1.03

Total/Wtd. Avg. 37 $865 $1.07

5

4

49


3



RENT COMPARABLES

RENT COMPARABLES


50



6

No. of Units 32

Occupancy: 100%


Valley Plaza Apartments

46450 Rubidoux Street

Indio, CA 92201

No. of Units 36

Occupancy: 100%


No. of Units 12

Occupancy: 95%


Park View Apartments

82597 Miles Avenue

Indio, CA 92201

Ave 44 Apartments

83325 Avenue 44

Indio, CA 92201


2 Bdr 1 Bath 12 850 $900 $1.06

Total/Wtd. Avg. 12 $900 $1.06


1 Bdr 1 Bath 9 750 $800 $1.07

2 Bdr 1 Bath 25 1,000 $930 $0.93

Total/Wtd. Avg. 34 $865 $0.96


1 Bdr 1 Bath 16 670 $800 $1.19

2 Bdr 1.5 Bath 16 866 $900 $1.04

Total/Wtd. Avg. 32 $850 $1.11

Comments

Comments

Comments

8

7


INDIO, CA

MARKET OVERVIEW

52

MARKET OVERVIEW


Riverside-San Bernardino Counties


Geography

The Riverside-San Bernardino metro, also referred to as

the Inland Empire, is a 28,000-square-mile region in

Southern California composed of San Bernardino and

Riverside counties. Valleys in the southwestern portion

of the region, adjacent to Los Angeles, Orange County

and San Diego County, are the most populous in the

metro. These areas abut the San Bernardino and San

Jacinto mountains, behind which lies the high desert

area of Victorville/Barstow to the north and the low-

desert Coachella, home of Palm Springs, to the east.

Market Highlights

Strategic location

■ Near LAX and Ontario International airports and

ports in Long Beach and Los Angeles, Riverside-San

Bernardino has vast air, rail and interstate systems.

Dominant industrial market

■ The metro is one of the nation’s leading industrial

markets in terms of sales, construction and

absorption.

Strong demographic trends

■ Jobs, colleges, new home construction and more

affordable housing will draw 372,600 new residents

to the Inland Empire by 2020.

Growing distribution market

■ Many Fortune 500 companies have massive

distribution centers in the area. Available land allows

for further development.

RIVERSIDE-SAN BERNARDINO

53

MARKET OVERVIEW

Largest Cities in Metro by Population


* ForecastSources: Marcus & Millichap Research Services, U.S. CensusBureau, Experian

Metro

The Riverside-San Bernardino metro contains a

population of more than 4.4 million. The largest city is

Riverside with 319,500 residents, followed by San

Bernardino. Although population growth has slowed

compared with the previous five years, the metro's

population is still expected to increase by 1.3 percent

annually through 2020, well above the national figure.

Infrastructure

Riverside-San Bernardino features three interstate

freeways, I-10, I-215 and I-15, that form a triangle

around one of the region’s core growth centers.

Additionally, the completion of the 210 freeway

extension made commuting to and from Rialto and San

Bernardino considerably easier.

The Riverside-San Bernardino metro has two major

airports: Ontario International and Palm Springs

International. The region also has a cargo-dedicated

facility, the Southern California Logistics Airport,

located just north of Victorville in the High Desert.

Two rail lines serve Riverside-San Bernardino, and the

region boasts one of the largest and most modern

intermodal facilities in the nation. Amtrak provides

passenger rail service, and MetroLink connects the area

to Orange County and Los Angeles. Local transit

agencies run bus service throughout the area.


Riverside 319,500

San Bernardino 216,700

Moreno Valley 204,500

Fontana 203,000

Rancho Cucamonga 171,700

Ontario 169,000


Airports

■ Ontario International

■ Palm Springs International

■ 33 smaller airports

Major Roadways

■ Interstates 10, 15 and 215

■ Highways 60 , 71, 91 and 210

Rail

■ Freight - BNSF and Union Pacific

■ Passenger - Amtrak

■ Commuter - MetroLink

The Riverside-San Bernardino Metro is:

■ 60 miles from Los Angeles

■ 100 miles from San Diego

■ 113 miles from Tijuana

■ 400 miles from San Francisco

54

MARKET OVERVIEW


* ForecastSources: Marcus & Millichap Research Services, Bureau ofEconomic Analysis, Moody's Analytics, U.S. Census Bureau,CoStar

Economy

The Riverside-San Bernardino metro has one of the

largest economies in the United States. While the

region’s economic expansion has been fueled by a

number of factors, robust population growth has been

the primary demand driver. High home prices

throughout much of Southern California leave residents

seeking more affordable options in the Inland Empire.

The resulting increase in population will continue to

heighten the need for housing, retail goods, personal

services and government services.

There has also been exceptional growth in wholesale

trade and warehousing as the area is an important

distribution hub for the Southwest. Riverside-San

Bernardino is the premier location in the Los Angeles

Basin for new distribution facilities. This is because of

its large pool of experienced workers, relatively

inexpensive land and highly efficient intermodal

transportation system that reduces the cost of both

aggregating and distributing shipments. Amazon and

Deckers have huge warehouses in the region, and

growth in the distribution industry is expected to

impact all other sectors.

During the past year, the Riverside-San Bernardino

metro recorded higher industrial absorption than most

other industrial markets in the state. The distribution

system also benefits two major cargo airports: Ontario

International and the Southern California Logistics

Airport in Victorville.



55

MARKET OVERVIEW


Labor

The Riverside-San Bernardino metro employment base contains more than 1.3 million workers, and new jobs are

projected to be generated at an annual average pace of 1.7 percent through the next five years, above the national

growth rate of 1.3 percent. Traditionally, area residents who relocated from neighboring Los Angeles County or

Orange County continued to commute to these markets for work. In recent years though, a rise in commercial

development in the Inland Empire has generated more local jobs. As such, the job pool is becoming increasingly

diverse, and many of the metro’s population-serving industries are growing.

The metro’s infrastructure and proximity to the Los Angeles and Long Beach ports attract companies seeking West

Coast distribution hubs. As a result, the trade, transportation and utilities sector accounts for 24 percent of all

metro jobs. Given the prevalence of military installations and numerous cities and municipalities in the region, the

government sector makes up another 17 percent of total employment and is poised to grow by 0.3 percent

annually throughout 2020.

Education and health services is another large sector, with 201,300 employees, equaling 15 percent of the

workforce. Employment in this segment is expected to grow 3.9 percent annually during the coming five years.

Construction will also expand at 3.9 percent annually in that time.

Additionally, freeway improvements providing easier access to the eastern part of the metro and cities, including

Moreno Valley, Palm Springs and Palm Desert, should promote healthy employment growth as companies move

into these areas in the years ahead.

* ForecastSources: Marcus & Millichap Research Services, BLS, Moody's Analytics



56

MARKET OVERVIEW


Major Employers

Employers

Government entities account for some of the largest

employers in the region, including Fort Irwin and

March Air Reserve Base. As the base downsized, unused

land was transformed into the March Inland Port, a

350-acre aviation-based industrial business park. March

Inland Port Airport is a public joint-use airport and its

13,000-foot runway is one of the longest runways on

the West Coast. Another significant employer is

Ontario International Airport. The facility provides

thousands of jobs at the airport and more than 50,000

indirect, off-site positions. Strong growth will continue

at the airport, given the limits to expansion placed on

neighboring airports in Los Angeles and Orange

counties.

Major healthcare providers such as Loma Linda

University Medical Center and Kaiser Permanente also

provide a big portion of the region’s jobs. Demand for

medical services is projected to rise rapidly in the

coming years because of the area’s increasing population

and the baby-boomer generation’s move into its

retirement years.

While Riverside-San Bernardino has a significant share

of large employers, the majority of companies are small.

This emphasis on small firms encourages innovation

and flexibility and is positive for the area’s long-term

outlook, as most of the growth taking place in the

economy is occurring in the small-business sector.

* ForecastSources: Marcus & Millichap Research Services, BLS, Moody'sAnalytics, Experian



San Bernardino County

Riverside County

Stater Bros.

Loma Linda University Medical Center

Kaiser Permanente

Wal-Mart Stores Inc.

University of California, Riverside

Fort Irwin

Ontario International Airport

March Air Reserve Base

57

MARKET OVERVIEW


Demographics

The Riverside-San Bernardino metro consists of nearly

1.4 million households and more than 4.4 million

residents, making it one of the largest metropolitan areas

in the nation. While expansion will slow from earlier in

the decade, the Inland Empire is still on pace to grow

1.3 percent per year during the next five years, above the

national rate of 0.8 percent annually. This population

gain is driving new housing construction.

The majority of recent population growth in the area

was due to in-migration rather than natural increases.

Factors fueling in-migration include the strong local

economy, relatively affordable housing, large parcels of

developable land and a lack of available land in Los

Angeles County. The median existing home price in

Riverside-San Bernardino, at $299,700, also remains

much lower than medians in adjacent counties, allowing

63 percent of households to afford to own their home.

Residents are becoming more educated, as more than 50

percent of the metro’s adults have at least some college

education, and almost 20 percent of those ages 25 and

older have attained a bachelor’s degree or higher.

Increasing education levels have helped to raise

household earnings in the metro. The median

household income rests at $56,100 per year, on par with

the national median.

* ForecastSources: Marcus & Millichap Research Services, Moody'sAnalytics, U.S. Census Bureau



58

MARKET OVERVIEW


The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including estimates and forecasts, were used and may be subject to revision.

Quality of Life

Riverside-San Bernardino offers a diversity of

landscapes, including the palm-tree-lined and pool-

studded Coachella Valley, the mountain communities of

Big Bear and Lake Arrowhead, the rolling hills and

wineries of Temecula Valley and the suburban

communities of the West San Bernardino Valley and

Moreno Valley. A temperate climate offers moderate

winters, warm summers and generally low humidity.

One of the greatest draws of the metro is relatively

affordable housing. The median home price in

Riverside-San Bernardino is nearly 40 percent lower

than in Los Angeles County and nearly 60 percent less

than in Orange County.

The Inland Empire provides a number of cultural

opportunities, including the Riverside Metropolitan

Museum, the Mission Inn Museum and the Museum of

History and Art in Ontario. The California Theatre of

Performing Arts in San Bernardino stages a number of

performances through the year, as does the refurbished

Fox Center for the Performing Arts. The Riverside

County Philharmonic provides classical music concerts

throughout the area.

The region features an impressive offering of more than

20 college campuses, including nine community

colleges, two California State University campuses and

the University of California, Riverside.

* ForecastSources: Marcus & Millichap Research Services, Moody'sAnalytics, National Association of Realtors®



59

MARKET OVERVIEW


Jobs Foster Rental Demand, Encourage Development and InvestmentPopulation and economic gains lead occupancy upward. The Inland Empire grew by nearly 60,000 people, as jobgrowth mounted for a sixth consecutive year in 2015. The creation of new industrial positions remained robust asthe national distribution of retail inventories continued to increase alongside the rise of national retail sales andimports. Overall total employment gains encouraged household formation to a new high and placed it on atrajectory for future growth. Developers responded by obtaining new building permits and initiating construction.Large expanses of land are being dedicated to single-family residential tracts, with built-in schools and amenities.Apartment builders are also developing on a large scale this year, with multiple sites dedicated to complexesconsisting of 300 units or more to meet continually rising tenant demand. This year’s completions will notthreaten existing operations as vacancy remains well below the traditional replacement level. As units fill, rentalrates will expand for the seventh year in a row, securing another year of strong apartment revenues.

Buyer demand rises as apartments become choice residences for households. Investors lifted apartment sales to anelevated level in 2015 compared with previous years as compressed yields in larger Western metros did not meetpro forma return requirements. Sponsored capital groups are capturing many of the institutional-grade propertiesat near 4 percent returns. Individual buyers and private capital clients are driving value appreciation by bidding onassets with first-year yields listed in the low- to mid-5 percent range. As these properties are targeted by severalaggressive investors, a competitive buyer environment compressed cap rates nearly 20 to 50 basis points below thelisted mark. Additionally, some buyers are also providing large amounts of upfront capital at the purchase contractin order to compete. Opportunistic investors continue to focus on value-add assets generally in prime areas such asOntario, Chino/Chino Hills and Rancho Cucamonga at 4 to 5 percent initial yields. Properties farther east andsouth can trade 100 basis points higher. Such assets near new complexes are also drawing additional buyers.

Employment: After tapering slightly to 3.6 percent growth in 2015, employment growthwill pick up again to 3.8 percent annually, or 52,000 jobs, this year. Construction hiringwill be particularly robust as commercial and residential development continue.

Construction: Builders will ramp up completions to 2,400 this year, eclipsing last year’sdeliveries to meet rising tenant demand. This will increase local apartment supply 1.3percent. In 2014, developers added 1,300 units to the market.

Vacancy: After a 40-basis-point trim in 2015, Riverside-San Bernardino’s vacancy willtighten further this year, slipping 20 basis points to 3.7 percent and nearing full occupancy.Tightening will be especially prevalent in western submarkets such as Ontario/Chino andRiverside.

Rents: Compressed vacancy will foster rent advances of 5.6 percent in 2016 that will surpassthe five-year average growth of 3.7 percent. Faster rent growth will be partially mitigateddue to concessions in newer outlying units. In 2015, average effective rent surged 6.0percent.


2016 Multifamily Forecast

3.8% increasein total

employment

2,400 unitswill be completed

20 basis pointdecrease in

vacancy

5.6% increasein effective rents


60

MARKET OVERVIEW


Housing and Demographics

■ Job growth elevated household formation 2.3 percent in 2015, the fastest pace in a decade. Nearly 31,300 newhouseholds were added to the metro, accelerating from the 1.6 percent growth in 2014.

■ The median home price for the metro increased 6.5 percent last year to approximately $294,600, a 5.4 percentyear-over-year gain. The median household income grew 1.5 percent to $56,100 annually, a deceleration from3.6 percent rise in the prior year.

■ Homeownership isn’t affordable for many residents, as the median household income is $12,800 less than theminimum required for a median-priced home based on traditional financing.

■ Outlook: Permitting activity is projected to ramp up this year, rising approximately 60 percent for single-familyissuances and 180 percent for multifamily units. If the economy continues to grow, many of these permitscould be activated into starts.

Economy

■ The metro added 47,800 positions last year, elevating employment 3.6 percent year over year. Professional andbusiness services jobs slipped 4.7 percent in 2015, though gains overshadowed temporary softening. Thisfollows a 5.4 percent increase in 2014, the highest rate in a decade.

■ The large trade, transportation and utilities sector added nearly 16,000 jobs last year based on 4.9 percentgrowth, as logistics sector hiring was strong in 2015. Relative gains were led by construction and leisure andhospitality positions, which advanced 10.9 and 5.2 percent, respectively.

■ Unemployment fell 100 basis points to 6.4 percent in 2015 amid robust job growth, marking a sixth year ofdrops. The rate is less than half than the 2009 peak level.

■ Outlook: The Inland Empire will add 52,000 headcounts, extending growth by 3.8 percent in 2016. Adiversified economy will support strengthening in multiple employment sectors.



* ForecastSources: Marcus & Millichap Research Services; BLS; Economy.com; NAR

61

MARKET OVERVIEW


Construction

■ Apartment builders temporarily curbed deliveries to 1,290 units in 2015, nearly half the amount of the prioryear, when 2,400 rentals were completed.

■ Construction activity was concentrated in the Corona, Redlands and Ontario/Chino submarkets, each ofwhich received 280 apartments or more. Of these locations, only the Corona submarket has a vacancy rateabove the metrowide average. Deliveries in this area also included a portion of affordable units, which poselittle risk to current inventory.

■ The inability of many residents to purchase a private home in their desired neighborhood has led manyhouseholds to choose apartments. In return, this demand has pushed rental rates above some tenants’ means.This demand has also motivated apartment developers, including those in the affordable housing segment, tocomplete new projects. Last year, nearly 15 percent of deliveries were designated as low-income housing units.

■ Outlook: Apartment construction will ramp up in 2016 as 2,400 units are brought to market. A majority ofthese will be market-rate offerings with a small portion of affordable housing in the mix, similar to 2015deliveries.


* ForecastSources: Marcus & Millichap Research Services; MPF Research


Vacancy

■ The Inland Empire’s vacancy tightened 40 basis points to 3.9 percent in 2015 as new supply was outpaced bydemand. In the prior period, vacancy dropped 50 basis points.

■ Eight of the 12 local submarkets posted vacancy rates below the metro average. Multiple areas are inchingtoward fully occupancy and will easily absorb this year’s deliveries.

■ The market’s lowest vacancies were the west in the Riverside and Ontario/Chino submarkets at 2.9 and 3.0percent, respectively. These areas are a short commute to Orange County and Los Angeles and have well-established retail and entertainment areas for renters.

■ Outlook: The metro’s vacancy is on target to tighten 20 basis points to 3.7 percent this year. Demand willremain robust from local workers and those commuting to Los Angeles and Orange counties, where rents areout of reach for many area residents.

62

MARKET OVERVIEW


Rents

■ Last year, the average effective rent rose 6.0 percent to $1,237 per month, surpassing the prior peak by 10.9percent. In 2014, average effective rent expanded 5.4 percent.

■ Three submarkets recorded rent gains above 7.0 percent last year. Double-digit rent growth was posted in theCorona submarket, escalating 11.6 percent year over year to $1,450 per month. The San Bernardino metrorent grew 9.5 percent to $960 per month; it’s one of three local submarkets where average monthly rent sitsbelow $1,000.

■ The average rent neared the $1,500 per month mark in three submarkets: Rancho/Cucamonga/Upland,Ontario/Chino and Corona. Rancho Cucamonga/Upland had the highest rate of $1,476 per month, thoughgrowth was tempered at 2.9 percent.

■ Outlook: Net absorption has exceeded completions over the past four years, boosting rental rates. Average rentwill complete a seventh consecutive year of gains in 2016, rising 5.6 percent in 2016.


Sales Trends

■ Transaction velocity in the Inland Empire intensified 12 percent last year, reaching a new elevated level,following a 23 percent surge in 2014. Buyers are competing for available assets, some arriving with an increasedappetite for risk.

■ The average price per door rose 8.8 percent annually to $145,300 in 2015. This is approximately half the costof what can be purchased in Los Angeles and Orange counties. Within the Inland Empire, pricing below theaverage can be found in areas such as Indio and San Bernardino, generally ranging around $60,000 to$120,000 per door.

■ Average initial yields compressed 40 basis points last year to 5.7 percent. Buyers willing to pay a premiuminvested in areas such as Ontario, where returns were 20 to 50 basis points below the metrowide average.

■ Outlook: Buyers desiring to own assets in Southern California are targeting the Riverside-San Bernardinometro for higher returns than are available farther west. Investment activity will remain elevated for a sixthconsecutive year.


* ForecastSources: Marcus & Millichap Research Services; MPF Research; CoStar Group, Inc.; Real Capital Analytics

63

MARKET OVERVIEW



Capital Markets

■ Following the first interest rate increase since 2008, the Federal Reserve has promised a measured, patientapproach to future rate hikes. Recently, the mixed picture of U.S. economic data has given several members ofthe bank’s monetary policy committee reason to pause. Robust labor market indicators present positiveevidence of continued expansion, while manufacturing and inflation expectations have weakened due to thestronger dollar. As a result, the central bank will likely weigh the balance of data over the coming monthsbefore enacting additional rate hikes.

■ Multifamily housing trends have continued to accelerate over the past year, with the national vacancy ratefalling 40 basis points to 4.1 percent. Meanwhile, development remains considerable, although generallylimited to primary markets; deliveries in 2015 exceeded 230,000 units for the second straight year, the highestannual total since 2000. However, despite the incredible pace of construction, net absorption surpassed supplygrowth, supporting a 5.6 percent climb in average effective rental rates.

■ Fannie Mae and Freddie Mac are underwriting five-, seven- and 10-year commercial property loans withmaximum leverage of 80 percent. Interest rates for these loans will range from 3.7 percent to 4.2 percent,depending on loan structure and maturity, for loans above $3 million. Portfolio lenders, including commercialbanks and life insurance companies, offer debt at 65 to 75 percent loan to value on 10-year terms at 3.60 to4.25 percent. Floating-rate terms typically carry a maximum LTV of 65 percent for stabilized properties, whilepricing at a 250- to 425-basis-point spread above Libor. CMBS issuance topped $100 billion last year, butwider spreads have curtailed activity thus far in 2016.


Local Highlights

■ Employment in the Inland Empire has increased by nearly a quarter since 2010. The local economy hasdiversified to include a greater proportion of positions in the professional and business services and theeducation and health services sectors, in addition to the strong industrial employment base. Overall householdgrowth has encouraged development, supporting growth in the construction sector. Leisure and hospitalitysector positions have also been surging, with all sectors supporting unemployment plunging approximately 700basis points in the period to 6.4 percent in 2015.

■ Lewis Cos. is bullish on the metro’s residential market, with apartment and residential sites slated for futurecompletion. Lewis will deliver 499 units this year in the phased Homecoming at the Preserve in Chino. InOntario, its single-family master-planned project of Park Place consists of 287 acres, 1,250 homes, a school andclubhouse.

■ Multi-acre master-planned residential communities aim to serve a variety of residents. A large 55-plus cohorthas driven some developers to initiate projects such as Terramor, which will include 1,443 home sites on nearly1,000 acres. The project will also include both age-restricted and market-rate neighborhoods. These projectsaren’t likely to reduce apartment demand but rather shift homeowner demand from larger Californian metrosto the west.


INDIO, CA

DEMOGRAPHIC ANALYSIS

1 Mile 3 Miles 5 Miles

2000 Population 12,764 53,956 86,709

2010 Population 13,753 79,318 136,195

2014 Population 14,360 84,219 143,897

2019 Population 15,080 94,823 165,019

2000 Households 3,208 14,909 25,432

2010 Households 3,561 23,328 41,438

2014 Households 3,743 24,941 44,057

2019 Households 3,938 28,350 51,033

2014 Average Household Size 3.80 3.33 3.24

2014 Daytime Population 4,403 17,569 31,832

2000 Owner Occupied Housing Units 51.09% 50.75% 54.23%

2000 Renter Occupied Housing Units 45.35% 36.48% 30.48%

2000 Vacant 3.55% 12.77% 15.30%



2014 Vacant 5.42% 13.48% 15.14%



2019 Vacant 5.99% 13.35% 15.05%

$ 0 - $14,999 16.4% 12.8% 11.7%

$ 15,000 - $24,999 21.9% 14.3% 12.6%

$ 25,000 - $34,999 14.5% 12.1% 11.6%

$ 35,000 - $49,999 14.1% 15.0% 14.4%

$ 50,000 - $74,999 13.0% 18.7% 19.1%

$ 75,000 - $99,999 8.7% 10.7% 10.7%

$100,000 - $124,999 5.6% 7.5% 7.7%

$125,000 - $149,999 2.3% 3.2% 4.0%

$150,000 - $199,999 2.1% 3.1% 3.9%

$200,000 - $249,999 0.6% 1.1% 1.8%

$250,000 + 0.9% 1.6% 2.5%

2014 Median Household Income $33,446 $45,026 $49,656

2014 Per Capita Income $13,332 $18,991 $22,323

2014 Average Household Income $50,093 $63,351 $72,433

Demographic data © 2012 by Experian.

65




DEMOGRAPHIC REPORT

Geography: 5 miles

Population

In 2014, the population in your selected geography is 143,897. The population has changed by 65.95% since 2000. It is estimated

that the population in your area will be 165,019 five years from now, which represents a change of 14.67% from the current year.

The current population is 49.31% male and 50.68% female. The median age of the population in your area is 32.1, compare this to

the Entire US average which is 37.3. The population density in your area is 1,832.01 people per square mile.

Households

There are currently 44,057 households in your selected geography. The number of households has changed by 73.23% since 2000.

It is estimated that the number of households in your area will be 51,032 five years from now, which represents a change of 15.83%

from the current year. The average household size in your area is 3.24 persons.

Income

In 2014, the median household income for your selected geography is $49,655, compare this to the Entire US average which is

currently $51,972. The median household income for your area has changed by 30.33% since 2000. It is estimated that the median

household income in your area will be $57,680 five years from now, which represents a change of 16.16% from the current year.

The current year per capita income in your area is $22,323, compare this to the Entire US average, which is $28,599. The current

year average household income in your area is $72,432, compare this to the Entire US average which is $74,533.

Race & Ethnicity

The current year racial makeup of your selected area is as follows: 60.68% White, 1.87% Black, 0.08% Native American and 2.18%

Asian/Pacific Islander. Compare these to Entire US averages which are: 71.60% White, 12.70% Black, 0.18% Native American and

5.02% Asian/Pacific Islander.

People of Hispanic origin are counted independently of race. People of Hispanic origin make up 68.16% of the current year

population in your selected area. Compare this to the Entire US average of 17.13%.

Housing

In 2000, there were 16,281 owner occupied housing units in your area and there were 9,150 renter occupied housing units in your

area. The median rent at the time was $495.

Employment

In 2014, there are 31,832 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed

that 43.86% of employees are employed in white-collar occupations in this geography, and 55.95% are employed in blue-collar

occupations. In 2014, unemployment in this area is 11.37%. In 2000, the average time traveled to work was 21.9 minutes.


66




SUMMARY REPORT

Number of people living in a given area per square mile.


67




POPULATION DENSITY

The number of people employed in a given area per square mile.


68




EMPLOYMENT DENSITY

Average income of all the people 15 years and older occupying a

single housing unit.


69




AVERAGE HOUSEHOLD INCOME

INDIO, CA

OFFERING MEMORANDUM


Offices Throughout the U.S. and Canada

www.MarcusMillichap.com

Exclusively Listed By:

Matthew D. WenzelFirst Vice President Investments

Director, National Multi Housing GroupNewport Beach Office

License: CA: 01198357Tel: (949) 419-3205Fax: (949) 419-3210

[email protected]/MatthewDWenzel

permit ready 60-unit multi-family site · information provided. all potential buyers must take...

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