L.A. Second in Nation for Multifamily Construction

Los Angeles ranks second in the nation for multifamily construction spending, according to new research from Apartment List. In the period from 2000 to 2016, the Los Angeles market has seen $28.4 billion in new multifamily construction, the second highest in the nation. When controlled for population, however, the market drops to number 15 in the nation for multifamily construction spending.

Largely, this jump in spending has been driven by the housing shortage. “Los Angeles is an established metro with a strong economy, which has not built enough new housing to keep pace with demand,” Chris Salviati, housing economist at Apartment List, tells GlobeSt.com. “In general, this need for new housing, particularly dense multifamily housing near the urban core, is driving new construction. Multifamily is making up an increasing share of new residential construction spending in the L.A. metro. In 2000, multifamily accounted for 25% of new residential spending, while in 2016, that figure had doubled to 50%.”

Salviati expects multifamily construction spending to continue to be strong in the market, especially as the dearth of residential supply intensifies. “Although L.A. does have a severe housing shortage, many of the factors that caused that shortage are still in place,” he explains. “Namely, restrictive zoning policies, as well as shortages of labor and materials have made it difficult and expensive to build new housing, which is why LA does not rank higher in terms of per-capita multifamily spending.”