Sales of commercial properties in Los Angeles County slipped in the first half of the year but still outpaced every other real estate market in the country, including Manhattan.
High-priced trades of hotels, shopping centers and industrial properties helped launch L.A. County to an estimated $12.6 billion in sales, according to a study released Thursday by property data provider Real Capital Analytics.
That total was down 11% from the first half of 2016, but property sales in Manhattan, last year's leader, fell much more — 55% to $10.6 billion as big investors such as pension and sovereign wealth funds grew more wary of pulling the trigger, said analyst Jim Costello of New York-based Real Capital Analytics.
Uncertainty about interest rates and potential changes to federal tax policies such as mortgage-interest deductions and carried-interest tax breaks have slowed big investors, he said.
"If you are going to make big bets on major deals you are going to be more cautious," Costello said. "You are going to underwrite things more carefully and slowly."
Recent L.A. County deals include the Jeremy West Hollywood hotel on the Sunset Strip, which Starwood Capital Group bought from developer CIM Group for $280 million, according to Real Capital Analytics.
The sale was in escrow in the first half and closed in July.
Starwood Chairman Barry Sternlicht said Thursday that the 286-room hotel at La Cienega and Sunset boulevards will open next month as the Jeremy but be relaunched toward the end of 2018 as the 1 West Hollywood.
Starwood's 1 brand is an eco-conscious line the hotelier touts as being assembled with reclaimed materials and careful with its energy use and waste.
Other major L.A. hotel deals in the first half include the $219-million purchase of the W Hollywood hotel by Host Hotels & Resorts and the $115-million acquisition of the DoubleTree by Hilton Hotel Los Angeles Downtown by China-based Han's Holding Group Ltd., according to Real Capital Analytics.
In March, the L.A. area ranked as the No. 1 choice for investment in North America in a survey of global real estate investors who have a combined total of $1.7 trillion to spend on property in 2017.
A representative of brokerage CBRE Group Inc., which conducted that survey, said property prices in Los Angeles are considered a relative bargain by international standards. It is also considered to be in a better place in its real estate cycle, with room for commercial rents and prices to rise.
"A lot of signs still point to growth in the L.A. region," CBRE property investment expert Joe Cesta said Thursday. Many local companies are hiring and the housing industry is reviving as more people move to the area.
Real estate investors are hunting for stability, he added, "and population and job growth can provide that stability."
L.A. County trailed Manhattan and Boston in the total value of office sales in the first half, but two LA. office deals were among the largest transactions in the country.
SunAmerica Center in Century City was purchased for $855 million by JMB Realty Corp. and One California Plaza on Bunker Hill in downtown went for $459 million to Rising Realty Partners and Colony NorthStar Inc.
