The Lights Are On, But Nobody’s Home

The Lights Are On, But Nobody’s Home
By: Nicholas A. Dunlap, CPM

Skyline Towers, the beautiful twin set of 25 story, high rise apartment homes located just off of the 55 freeway at Macarthur is now open and available for rent. Acquired earlier in March by Essex Property Trust in a JV effort, the firm purchased the 349 unit complex for $128,000,000, or $366,000 per door. The uber-luxurious complex was originally built as condominiums, but anyone who drove the 55 freeway on a regular basis over the past year and a half noticed that until recently, the construction had all but come to a stand still.

Floor to ceiling windows, Viking stainless steel appliances, expansive floor plans and 11 foot ceilings are just some of the interior amenities future residents can expect. Exterior amenities include a pool, party room, lounge and more. The catch? Rents start at $3,000 per month. While this is what they are asking, I would anticipate they will achieve an effective rent far lower, closer to $2,200. Why? We have luxurious 2 Bed 2 Bath apartment homes of our own in the same market area, albeit without the same exterior/interior amenities, but even with designer upgrades, we are having difficulty getting $1,395 for ours.

So, to achieve the $3,000 per month starting price for their rentals, I would recommend one of two things: free rent for several months an a sufficient fixed-term lease so that the contract rent is $3,000 but in reality costs the tenant less, or, pursue corporate housing contracts and opportunities with some of the larger legal/accounting/professional firms in that area.

Either way, it will be interesting to observe just how long those lights stay on inside vacant apartment homes.