Apartment Construction Surges in Los Angeles
Unlike most of the nation, the Los Angeles apartment market has yet to reach a full recovery in rental rates since the recession. However, like most of the nation’s apartment market, Los Angeles is seeing a big surge in new apartment development.
Los Angeles Performance Highlights for Q1 2013
The big headline coming out of the Los Angeles apartment market is the same one we’re talking about nationally: new apartment development.
New apartment construction is ramping up quickly in Los Angeles with 12,232 units under way at the end of Q1 2013, a level not seen in nearly five years. What makes this interesting is that the majority of this new development is high end product located in the metro’s priciest submarkets.
More good news is that while construction is up, so is job growth. The metro gained the highest number of new jobs in more than a decade according to data from the Bureau of Labor and Statistics. However, the metro is still down, on net, 200,000 jobs from peaks levels prior to the economic downturn. Additionally, much of the new job growth is focused on lower paying jobs.
Given that kind of economic climate and rate of new construction, it’s tough to raise rents. Rents were up 2.6% year over year as of Q1, which matches the U.S. rent growth average for the quarter.
The other problem is that despite the job growth, apartment demand has fluxuated, rising and falling over the past seven quarters. At the end of Q1 2013, occupancy dropped 20 basis points and settled at 96.3% year over year.
Outlook: Over the next year, MPF Research expects more of the same in the Los Angeles apartment market. Demand will remain unsteady but over the course if tge year demand will add up to keep pace with new supply, which will keep occupancy somewhat steady. MPF is forecasting that rents will climb 3.3% over the next year.
Carnahan Property Management can manage these properties as it has for over 60 years.
