LOS ANGELES—The Los Angeles multifamily market has shown its longevity during the second quarter with strong rent growth and nearly flat vacancy rates despite several new deliveries, according to the NAI Capital multifamily report. While vacancy rates increased by 20 basis points, according to the report, rents were up 5.2% year over year.
“The market continues to amaze people,” J.C. Casillas, VP of research at NAI Capital, tells GlobeSt.com. “The vacancy only went up 20 basis points in the face of all of this new delivery. I was looking back to the last time that we had huge deliveries in the marketplace, and that was prior to the last downturn. In 2008, there were close to 5,600 units delivered to the market, and at that point, the vacancy went up to 5.3%. It has been steadily declining since then.”
Casillas says that every submarket in Los Angeles is experiencing rental growth and all-time low vacancy rates, while some markets, most notably Downtown Los Angeles, are seeing development booms. The lack of affordable single-family housing is fueling much of this growth. “The rental market has continued to go through the roof because of the lack of affordability for single-family homes specifically. That has forced people to come through the rental market, and they continue to stay there,” explains Casillas.
While development levels in the city are at all-time highs, the new supply is meeting the demand, and getting absorbed quickly. “Product is coming online and it is being occupied. It may take some time, but it is welcome product to the market,” says Casillas. “The way that things are trending with the lack of affordable single-family housing, a lot of people are going to stay in the rental market.”
As a result of the strong fundamentals, investor demand also continues to grow in the market. In the second quarter, 12,497 units traded hands in Los Angeles, a total of 960 transactions and an 8.8% year-over-year increase. “Investors continue to look opportunities in the multifamily market, especially with the stock market continuing to show volatility,” adds Casillas. “We have strong demographics pushing into L.A., specifically on the Westside, and many investors view this market as a safe place to put their money. It is going to be a good year to be a landlord or the owner of an apartment building.”
Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.
LOS ANGELES—The Los Angeles multifamily market has shown its longevity during the second quarter with strong rent growth and nearly flat vacancy rates despite several new deliveries, according to the NAI Capital multifamily report. While vacancy rates increased by 20 basis points, according to the report, rents were up 5.2% year over year.
“The market continues to amaze people,” J.C. Casillas, VP of research at NAI Capital, tells GlobeSt.com. “The vacancy only went up 20 basis points in the face of all of this new delivery. I was looking back to the last time that we had huge deliveries in the marketplace, and that was prior to the last downturn. In 2008, there were close to 5,600 units delivered to the market, and at that point, the vacancy went up to 5.3%. It has been steadily declining since then.”
Casillas says that every submarket in Los Angeles is experiencing rental growth and all-time low vacancy rates, while some markets, most notably Downtown Los Angeles, are seeing development booms. The lack of affordable single-family housing is fueling much of this growth. “The rental market has continued to go through the roof because of the lack of affordability for single-family homes specifically. That has forced people to come through the rental market, and they continue to stay there,” explains Casillas.
While development levels in the city are at all-time highs, the new supply is meeting the demand, and getting absorbed quickly. “Product is coming online and it is being occupied. It may take some time, but it is welcome product to the market,” says Casillas. “The way that things are trending with the lack of affordable single-family housing, a lot of people are going to stay in the rental market.”
As a result of the strong fundamentals, investor demand also continues to grow in the market. In the second quarter, 12,497 units traded hands in Los Angeles, a total of 960 transactions and an 8.8% year-over-year increase. “Investors continue to look opportunities in the multifamily market, especially with the stock market continuing to show volatility,” adds Casillas. “We have strong demographics pushing into L.A., specifically on the Westside, and many investors view this market as a safe place to put their money. It is going to be a good year to be a landlord or the owner of an apartment building.”
Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.
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