L.A. Tops Nation in Apartment Occupancy

LOS ANGELES—The Los Angeles apartment market is back on track after a sluggish end of 2016, when rents began to dip for the first time in the cycle. According to the latest report from Axiometrics, Los Angeles has one of the highest occupancy rates in the nation and rental rates that continue to climb. In February, Los Angeles had a 96% occupancy rate and 2.5% effective rent growth.

“L.A. occupancy has ticked back up in February after declining slightly over the past few months, part of which is the seasonal decline in the winter months and part structural as annual job gains have also slowed since mid-2016, although still quite healthy at more than 62,000 jobs gained as of January 2017,” Chuck Ehmann, real estate economist at Axiometrics, tells GlobeSt.com.

It isn't only February 2017. The Axiometrics' report forecasts rent growth throughout the year in Los Angeles and the surrounding submarkets, which also ticked up last month. The report pegs effective rent growth at 3.5% in Los Angeles, 3.8% in Orange County, 4.6% in Riverside-San Bernardino and 2.9% in Oxnard for the year. “New supply in L.A. is expected to peak for this cycle by the end of 2017 at more than 14,000 units and job gains are forecast to remain near current levels,” says Ehmann. “This will keep effective rent growth moderate and be a benefit to apartment renters in general. We forecast annual average effective rent growth for 2017 of 3.5%, slightly lower than 2016's average of 4.6%.”

Compared to the rest of the country, Los Angeles is one of the best performing metros. Axiometrics compared the market to 32 other major cities, and found that the market has been a top performer for years. “L.A. is among the top performers for occupancy, but then, it is generally a high occupancy market, averaging 95.8% occupancy since January 2012, post-Great Recession,” says Ehmann. “The February 2017 rate of 96.0% is down only 30 basis points (bps) from February 2016. In terms of annual effective rent growth, at 2.5%, LA is about in the middle of the 33 metros but ahead of Chicago, New York, Miami, Boston, and San Francisco, as well as the national average of 2.3%. Again, LA has slowed due to less job gain than last year and is about 200 bps lower than the post-recession average of 4.5%. The annual average effective rent growth for all of 2016 was 4.6%.”

LOS ANGELES—The Los Angeles apartment market is back on track after a sluggish end of 2016, when rents began to dip for the first time in the cycle. According to the latest report from Axiometrics, Los Angeles has one of the highest occupancy rates in the nation and rental rates that continue to climb. In February, Los Angeles had a 96% occupancy rate and 2.5% effective rent growth.

“L.A. occupancy has ticked back up in February after declining slightly over the past few months, part of which is the seasonal decline in the winter months and part structural as annual job gains have also slowed since mid-2016, although still quite healthy at more than 62,000 jobs gained as of January 2017,” Chuck Ehmann, real estate economist at Axiometrics, tells GlobeSt.com.

It isn't only February 2017. The Axiometrics' report forecasts rent growth throughout the year in Los Angeles and the surrounding submarkets, which also ticked up last month. The report pegs effective rent growth at 3.5% in Los Angeles, 3.8% in Orange County, 4.6% in Riverside-San Bernardino and 2.9% in Oxnard for the year. “New supply in L.A. is expected to peak for this cycle by the end of 2017 at more than 14,000 units and job gains are forecast to remain near current levels,” says Ehmann. “This will keep effective rent growth moderate and be a benefit to apartment renters in general. We forecast annual average effective rent growth for 2017 of 3.5%, slightly lower than 2016's average of 4.6%.”

Compared to the rest of the country, Los Angeles is one of the best performing metros. Axiometrics compared the market to 32 other major cities, and found that the market has been a top performer for years. “L.A. is among the top performers for occupancy, but then, it is generally a high occupancy market, averaging 95.8% occupancy since January 2012, post-Great Recession,” says Ehmann. “The February 2017 rate of 96.0% is down only 30 basis points (bps) from February 2016. In terms of annual effective rent growth, at 2.5%, LA is about in the middle of the 33 metros but ahead of Chicago, New York, Miami, Boston, and San Francisco, as well as the national average of 2.3%. Again, LA has slowed due to less job gain than last year and is about 200 bps lower than the post-recession average of 4.5%. The annual average effective rent growth for all of 2016 was 4.6%.”