Stabilizing Vacancy and Rent Gains Improves 2024 Outlook for Landlords
By Ryan Patap
CoStar Analytics
June 14, 2024 | 8:30 AM
Thanks to easing multifamily concessions and an uptick in average asking rents, Los Angeles apartment market conditions appear close to turning a corner, at least for landlords.
After a recent high of 27% in February, 16% of properties in L.A. County with 25 units or more provided some level of incentives in April. In May, that number was 18%.
Some of those concessions on offer range from small incentives, such as a waived application fee, to larger lures, such as eight weeks of free rent on a newly signed, 16-month lease in neighborhoods that have seen a windfall of new units, including downtown Los Angeles or Koreatown.
The moderation in multifamily concessions likely stems from improved renter demand in 2024. As of early June, the greater Los Angeles apartment market has seen renter demand of 3,700 units, more than double the renter demand seen during the same period last year. Tenant activity outpaced the around 3,300 net new units added year to date, allowing vacancy to hold steady at around 5%.
As a result of stabilizing conditions, average asking rents have seen modest gains in 2024 after registering losses late last year. Compared to one year ago, rents have increased by 0.5%.
While CoStar's national forecast calls for soft near-term economic growth, our outlook anticipates that the economy will avoid a recession. With household formation in Los Angeles expected to remain stronger in the near term compared to 2023, vacancy is forecast to decline in the second half of this year as renter demand improves and faces a moderating supply pipeline.
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