A new market analysis from real estate group Marcus and Millichap suggests that Los Angeles developers are on pace to add 13,430 new units to the multifamily rental market by the end of 2016. That total represents the quickest pace of development in two decades, the report says, and would more than double the output in 2015, when just 5,300 units were built.
Nearly one-third of all units in the LA area are being constructed in the Downtown area, with 4,100 units set to open by the end of the year. Other development hotspots are Hollywood, the South Bay, and the San Fernando Valley.
The vast majority of new apartments are being offered at market rate, though 400 affordable units and 500 senior units are also included in the total.
Those hoping the surge in development might lead to a slight dip in rental prices will likely be disappointed. Though the report predicts the added units will help raise the city’s dismally low vacancy rate, they probably won’t be enough to counteract the effect of sky high housing prices on the rental market. As the report notes, rents have already climbed more than seven percent over the past four quarters.
Last year, the California Legislative Analyst’s office estimated LA County would need to build more than 50,000 units of housing to bring down home prices that are increasingly driving longtime residents out of state.
The current boom in multifamily rental development noted in the report could be short-lived; should voters sign off on a controversial anti-development ballot measure in March, many large-scale residential projects would be affected by a two year moratorium on projects that require zoning changes.
- How Much Does Los Angeles Have to Build to Get Out of Its Housing Crisis? [Curbed LA]
- Los Angeles Has the Fewest Available Rentals of Any of the Biggest US Cities [Curbed LA]
- High Housing Costs Are Driving Californians Out in Droves [Curbed LA]