The Los Angeles apartment market is seeing renewed strength this year. Research from Marcus & Millichap shows that vacancy has declined by at least 350 basis points in Downtown Los Angeles and the Westside markets, two of the largest employment hubs in the city. As a result, the two submarkets have a sub 2% vacancy rate.

The rebound in the Los Angeles area has come in advance of a widespread return to the office, suggesting that more demand is likely to come later this year. As a result, Marcus & Millichap predicts that the vacancy rate will fall 40 basis points this year and rents will increase 7.2%.

The strong fundamentals are driven not only by strong demand but also a dearth of supply. While demand has rebounded, construction activity has not. Downtown Los Angeles will record a record decline in apartment deliveries this year, and Santa Monica is the only market on the Westside to deliver more than 500 units, according to the report. Overall, Los Angeles' apartment construction pipeline will deliver 10,000 units this year, increasing the total apartment stock by .9%.