Job Creation Lifts Rental Demand; Los Angeles Fundamentals Returning to Pre-Pandemic Levels
Leasing activity elevates to 15-year high. After the initial months of the health crisis, Los Angeles County has consistently registered positive renter demand. Fueled by the addition of 89,000 jobs during the second quarter, nearly 9,700 units were absorbed, highlighting recent performance. The diverse job creation that occurred from April through June improved property vacancy across all apartment tiers with each rental segment recording compression. These declines lowered overall vacancy to 4 percent and boosted the average rent by roughly 3 percent. With the county adding 37,800 households over the past year and strong job creation expected in the second half, vacancy is positioned to return to a pre-pandemic rate in the near term.
Luxury performance warrants inventory growth. Apartment deliveries in 2021 surpass the 10,000-unit mark for a second straight year. Nevertheless, only one of the metro’s four primary regions will register an annual increase, minimizing the potential impact of supply additions. Furthermore, Class A vacancy compressed across each of these locales during the past 12 months, an indication upcoming rentals should be well received. Greater Downtown Los Angeles represents the primary region slated for a year-over-year rise in completions, with most units in Mid-Wilshire and Hollywood. Elsewhere, the Westside Cities, San Fernando Valley and South Bay-Long Beach regions will each record 10 percent to 35 percent annual declines in delivery volume.