Supply Pressures, Anticipated Tenant Demand Should Temper Market’s Improvement
By Ryan Patap
CoStar Analytics
December 14, 2021 | 2:25 P.M.
It appears landlord-favorable conditions will persist in the Los Angeles apartment market headed into 2022. The market saw a reversal of conditions in 2021, with some of the strongest net absorption levels in the history of the market.
But any gains the sector sees in 2022 will likely be modest relative to the breakneck pace of 2021. Search activity on Apartments.com has moderated since the strong summer months. Apartment demand is typically cyclical, but there are limits to additional occupancy growth in the market.
The current construction pipeline contains 25,000 units, representing 2.5% of existing inventory, near the highest levels in decades. This will likely limit occupancy gains on a market-wide basis as well.
Looking at CoStar’s baseline scenario for the L.A. apartment market, vacancy is expected to continue to decline, but at a more measured pace than in 2021. Conditions are expected to remain landlord favorable.