Los Angeles Apartment Market in 2023: Strong Construction Activity, Affordable Housing Shortage

The Los Angeles apartment market has been steadily growing in the past year, with 8,900 net new units being delivered in the past 12 months. A significant addition to this growth is the completion of The Grand, a mixed-use development in Downtown Los Angeles that includes over 430 units, with 20% of them reserved for income-qualified renters. In addition to the units, The Grand also features a 300+ room hotel and 175,000 square feet of retail space.

Construction activity in Los Angeles is currently at near peak levels, with 28,000 market-rate units under construction in the county. This represents 2.8% of the existing inventory and is the highest level of construction starts seen in the area since 2016. The submarkets of Downtown Los Angeles, Burbank, and Koreatown have the most units under construction in relation to their existing inventory. Burbank is a notable exception to this trend, as it usually sees minimal construction activity. However, two projects currently underway - 777 N Front St. and First Street Village - are driving construction activity in the area.

Despite the high level of construction in Los Angeles, the market has struggled with a chronic undersupply of housing, particularly affordable housing. This is due in part to high construction costs and challenges with development such as NIMBY sentiment and onerous permitting processes. As a result, many of the new units being built are higher-end and cater to the luxury market. In the past 12 months, 7,100 of the 8,900 units completed were in high-end, 4 & 5 star communities.

Overall, the forecast for the Los Angeles multi-family apartment market in 2023 looks positive, with a strong level of construction activity and a steady demand for housing in the area. However, the ongoing challenges with the development of affordable housing will continue to be a concern for the market.