- Looking at the Greater Los Angeles Market, vacancy is projected to peak at 4.9% in Q4 of 2023 before falling throughout 2024, reaching 4.7% by Q4 2024. Through 2028, vacancies in Greater Los Angeles will steadily drop to 4.2%.
- In comparison, vacancies in the US will climb throughout 2024, reaching a vacancy rate of 7.4% in Q4 2024 before declining to 6.6% in 2028.
- Absorption will exceed net deliveries in 17 of the next 20 quarters.
- This is a significant reversal for the market, given that new unit deliveries exceeded absorption for almost all of 2022 and 2023.
- New construction has slowed significantly, due to regulatory headwinds and a high cost of capital. Development in Greater Los Angeles is at 2.2% of existing inventory, versus the national average of 5.1%
- Rent growth will edge above 2% in late 2024, after which annual rent growth will average 3%.
- Most development has taken place in Downtown and Hollywood, with most projects consisting of large, 4- and 5-star buildings.
- High interest rates and the rising costs of labor and materials are forcing developers to pull back on apartment projects throughout the West Coast.