Downtown Los Angeles Is Delivering Most of the City’s New Housing

Downtown Los Angeles is delivering most of the city’s new housing stock. The market continues to achieve record deliveries year-over-year, and is responsible for more than half of the new supply in the City of Los Angeles. The dynamic is impressive, considering the Downtown market makes up only a small portion of the total city, but it could also serve as a case study in how more supply impacts affordability dynamics.

“Since 2018, we have built half of the new residential inventory in the entire city. We have delivered 5,000 units out of nearly 10,000,” Nick Griffin, executive director of the DCBID, tells GlobeSt.com. “We are providing half of the inventory for the entire city, and we only have 1% of the land mass. That is important when you are talking about a city that facing a critical housing shortage.”

The new supply has helped to temper housing costs in the submarket. The latest DCBID report shows that the downtown area has $3.20 per square foot average for apartment rents and $2,619 average effective rent per unit. “The relevant corollary is that because of that because of the sustained amount of development, we have been able to keep the rent increases very mild,” says Griffin. “We have only seen a 1% increase in terms of effective lease rates, and in the city as a whole, they went up more than 8%. To me, that is not only the story of Downtown L.A. really providing critical housing, but also a statement on the importance of developing enough housing in general. It is a fairly straight forward supply and demand issue.”

This bevy of new deliveries is largely luxury housing, garnering top-market rents. However, Griffin says that the luxury housing segment opens up more affordable units. “We are only building luxury housing, but every one of the market rate units that is built is one more affordable unit that wasn’t converted to a luxury unit. That is an important aspect of this dynamic,” he says.

The new development didn’t happen by itself. The DCBID has been integral in working with developers and creating policies that cultivate the housing and other amenities needed downtown. “We have put into places policies and practices that are conducive to building more housing,” says Griffin. “I would also add that on a broader community level, the Downtown community, including residents, workers and companies, have really bought into the idea of L.A. being a big city. We are different than the rest of Los Angeles.”