Asking Rents in LA Multifamily Reach All-time Hight

A recent report highlights that apartment asking rents in Los Angeles County have reached an all-time high, but multifamily investment sales have been notably subdued in the first quarter of the year.

Multifamily Investment Trends

The report reveals that while the average sale price per unit in multifamily investment sales has increased, the vacancy rate has remained steady at 4.8 percent. Despite a quarterly uptick in asking rents, there's a modest increase compared to the previous year, with the average rent reaching a record $2,183 per unit per month. A significant influx of new high-end units contributes to this rise in average rents.

Challenges in Investment Sales

Multifamily property sales in L.A. County have seen a considerable decrease in quarterly transaction volume. Factors such as escalating construction costs, economic slowdown, and higher interest rates have hindered investment activity. Moreover, the city of Los Angeles imposes an additional transfer tax, further discouraging sellers.

Sales Data Overview

Comparing data from the first quarter with the previous year, the number of units sold dropped by 59 percent, totaling 3,041 units. However, the average sale price per unit increased by 1.4 percent year-over-year, reaching $312,857. Despite the decline in sales volume, the current number of units sold exceeds that of the same period during the Great Recession in 2009.

Key Transactions

Several notable transactions occurred during the first quarter of this year, including FPA Multifamily's acquisition of a luxury high-rise in Downtown L.A. for $186 million, Devonshire Delaware's purchase of an 18-unit complex, CityView's acquisition of six apartment buildings across L.A. for $63 million, and Helio Group's purchase of Cobalt Apartments in Culver City for $65 million.

Financing Initiatives

Various financing initiatives were also prominent during this period, including a $200 million package sponsored by Trammell Crow and R&V Management for a 600-unit development in Downtown Long Beach, Housing Diversity Corporation securing $100 million for two micro-unit housing projects in Downtown L.A., and Greystar and Resmark Companies obtaining a $95 million loan for multifamily and townhome unit construction in Santa Clarita.