New apartment construction in Los Angeles is concentrated in Downtown Los Angeles. According to a report from JLL, 1,816 apartment units delivered in the market in 2018, and another 3,258 units are planned to deliver in 2019 and 1,310 in 2020, creating a total pipeline of 6,384 units. This construction pipeline is significantly larger than any other Los Angeles submarket. North Los Angeles came in second with 4,583 units scheduled for delivery through 2020.

“Various factors have made downtown a prime area in Los Angeles for multifamily development,” Peter Belisle, southwest market director at JLL, tells Globest.com. “The market faces less building restrictions and organized community opposition than other cities. Downtown has also undergone a major transformation over the last 10-year and the population has doubled. DTLA is a now place where people want to live and offers world class entertainment and cultural venues. It's no longer just a place to work.”

In North Los Angeles, on the other hand, affordability is fueling an increase in new apartment construction. The pipeline in the market is significantly growing. This year, only 409 apartment units delivered, but 2,561 units will deliver in 2019. By 2020, the pipeline will exceed Downtown Los Angeles with 1,613 units scheduled for delivery. “Demand for housing in Los Angeles North is being driven by affordability. Rents are nearly 20% lower than the rest of Los Angeles attracting renters to the suburban market,” says Belisle. “A sizable portion of the Los Angeles population lives and works in the L.A. North area.” The Westside is third in L.A. for development activity, followed by the South Bay and Mid-Wilshire, according to the report.

While there are a substantial number of units scheduled to deliver through 2020, the construction pipeline in general may begin to plateau, but don't expect construction to stop altogether. Demand in Los Angeles continues to outweigh supply and the new supply this year has been absorbed by the market. “As we move deeper into the current economic cycle, we don't expect as many new housing starts,” explains Belisle. “However, there are many proposed projects in the pipeline and if the regional economy remains resilient, developers will likely move forward with these plans.”

While construction activity may slow down, rents certainly will not. In fact, the waning construction pipeline will only fuel rental rate growth into 2020. “We absolutely expect continued upward pressure on rents driven by strong demand,” adds Belisle. “Coupled with already low vacancy, a thinning development pipeline and potential increases in interest rates posing additional barriers to home ownership, we expect the multifamily market to remain a leading property sector in terms of rent growth.”

Instant Insights /

DTLA Sees Majority of New Apartment Development

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