Momentum Marks Reversal From Losses Late Last Year
By Ryan Patap
CoStar Analytics
March 13, 2024 | 9:46 AM
Los Angeles’ apartment rents are looking up. The end of February brought two consecutive months of increasing average asking rents, a reversal from rent declines in 2023.
During February, average asking rents in L.A. rose by 0.4% on a per-square-foot basis, building on 0.2% growth in January. This uptick largely mirror trends seen in most other U.S. apartment markets. Nationally, rents have risen for three consecutive months since late 2023, but they are up only 0.8% from Feb. 28, 2023. Month over month, national rents increased 0.3%.
Spurred by modest renter demand, property managers in Los Angeles relied more heavily on concessions in recent months. Around 27% of multifamily properties with more than 25 units provided concessions in February — the city's highest percentage since the first half of 2021.
Areas of L.A. with below-average rents, below-average vacancy rates and restrained development activity show the most rent growth momentum in the city. With average market rents of $2,240 per month, still around 35% above national averages, many lower- to middle-income L.A. renters flock toward the area's more affordable locations.
The North Hills/Panorama City and South Los Angeles apartment markets are outperforming, with around 2-2.5% rent growth. Vacancy in both areas is between 2.5% and 3.5%, well below the L.A. County average, and both areas have faced modest construction levels for decades. In contrast, downtown Los Angeles saw around a 2.5% loss. Vacancy is about 10%, the highest in Los Angeles County, and the area has seen over 2,000 new apartment units deliver during the past 12 months.
Los Angeles apartment rents are forecast to see gains accelerate this year. This is due to anticipated renter demand better matching supply additions in 2024 compared to 2023, which should result in vacancy starting to contract in the second half of this year.