Vacancy Now Below Pre-Pandemic Levels and Near-Term Outlook Is Favorable
By Ryan Patap CoStar Analytics
October 5, 2021 | 12:48 P.M.
The Los Angeles apartment market saw marked improvements during the third quarter after seeing the worst conditions in over a decade last year. Vacancies have been trending down since peaking at the end of 2020. Asking rents are above pre-pandemic levels, but the market has lagged the national average’s pace of gains since the onset of the pandemic.
Rent growth in the suburban and more affordable areas of L.A. County has fared better during the pandemic, and many of these locations continue to outperform the market. However, in recent months, several key areas of greater Los Angeles that lagged the overall market through much of the pandemic have seen rent growth accelerate and are now top performers.
Recent apartment demand has improved across the market, with net absorption — measuring the difference between move-ins versus move-outs — at its highest levels in decades. Even expensive and overbuilt areas that fared worse earlier in the pandemic, like downtown Los Angeles and Santa Monica, California, have seen considerable improvements in occupancy rates during the past several quarters.
Los Angeles has seen elevated construction levels for years and still has a sizable pipeline that needs to be absorbed in the coming quarters. Those areas with the most units underway are largely locations that have been development hotspots for years.
Property sales volume in the third quarter totaled $2.6 billion, demonstrating that investors are active in the apartment market. Average pricing per unit, which had flatlined during 2020, has been on the rise this year.