It is still too early to tellhow severe the oncoming recession will be or how long it will last.However, there is a plausible scenario that class-B and class-Chousing in Los Angeles could see substantially higher demand as aresult of the downturn, leading to rent gains in that marketsegment. Apartment List released a survey of Marchrents, showing flat rents consistent with long-term trends in LosAngles. The data was still to early to show the impacts of thevirus, but the forecast might not be total doom.

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"It seems highly possible that when moving activity returns tomore normal levels, an uptick in downgrade moves could result ineven tighter competition for rental units at the middle and lowerends of the market, while luxury vacancies get harder to fill. Inthis scenario, it wouldn't be unreasonable to see rents fall forclass-A properties, while class-B and C actually see acceleratedrent growth.," Christopher Salviati, housingeconomist at Apartment List, tells GlobeSt.com.

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The demand shift to this market segment is largely due to LosAngeles' exposure to job loss resulting from closures and socialdistancing restrictions. "A recession of some magnitude seemslargely inevitable at this point, but it's exact severity andduration, as well as the specific local impact to the L.A. area,are all a bit tougher to speculate on," says Salviati. "That said,in a reportwe released last week, we found that the L.A. metro has theeighth highest share of workers facing immediate economic risk fromwhat we've deemed the quarantine economy."

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While rents were flat in Los Angeles last month, the nationcontinued to see rent growth. In fact, national rent growth inMarch outpaced 2019 growth, making predicting the impact even morechallenging. "Year-over-year rent growth at the national levelcurrently stands at 1.9%, pacing ahead of last year's rate of 1.2%.Note that the 1.2% rate from last year was the slowest rate ofgrowth that we've seen over the past five years," says Salviati.Meanwhile, the current 1.9% rate is in line with trendsfrom 2017 and 2018, and is actually slightly lower than the overallrate of general inflation."

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While the year-over-year growth isn't much of an indication ofmarket strength, according to Salviati, it does show that—prior tothe pandemic—apartment rents nationally continued to grow. "Thefact that we're outpacing last year doesn't mean that the currentrate is particularly high, and overall, rents seem to be growing ata fairly healthy pace," he says. "Last year, many markets sawrecord numbers of new units hitting the markets, which I think wasdriving the lower level of rent growth."

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.