Top 5 LA Submarkets for Development by Number of Units
- Feb 28, 2020
As the economy continues its slow yet sustained growth, the multifamily industry is off to a steady start in 2020, although a slight decline in national deliveries is to be expected going forward, according to the latest Yardi Matrix national multifamily report. Contributing factors include a five-year low for construction loan originations and the increased cost of labor and materials.
In 2019, national completions slightly exceeded 300,000 units, with markets such as Charlotte, Seattle and Miami leading growth in terms of deliveries as a percentage of total stock. These metros surpassed the 4 percent threshold, while Los Angeles trailed growth with completions accounting for 2.1 percent of total rental inventory. In the midst of rent control regulations, we took a closer look at housing-strapped L.A.’s development pipeline and zeroed in on the submarkets with the largest number of units underway as of January, according to Yardi Matrix data.
5. Santa Monica–Brentwood
A total of 1,433 units were underway in Santa Monica–Brentwood, with developers working on nine projects as of January. The bulk of the new supply pipeline, or 61 percent, is scheduled for delivery later in 2020, while the remaining units are expected to come online in 2021. Another 3,560 apartments were in planning and permitting stages at the beginning of the year, indicating that rent control woes had little impact on long-term development plans as of yet. Santa Monica–Brentwood is one of the most expensive submarkets in the metro—with rents averaging $3,455 per unit as of January—due to limited availability. In the past five years, only 690 units were added to inventory.
The largest development is Douglas Emmett & Co.’s Landmark Two, a 34-story apartment tower billed as the first residential high-rise taking shape west of the 405 Freeway in more than 40 years. Rising at 11750 Wilshire Blvd., the Gensler-designed project is replacing a former Pavilions supermarket and is set to include 19 affordable units, with delivery scheduled for the fourth quarter of 2021.
4. East Hollywood
Developers had 1,746 units underway across eight projects as of January, with another 2,657 apartments in the planning and permitting stages. That’s a major uptick compared to previous years—only three projects totaling 356 units came online in East Hollywood between 2015 and 2019. The transit-oriented submarket has been going through somewhat of a construction boom, with developers kicking off projects at a fast pace during the past three years. Transit accessibility, along with its proximity to neighborhoods such as Los Feliz and Echo Park, contributes to the submarket’s appeal. East Hollywood has also emerged as a ‘desirable dining scene’, according to Eater LA, drawing in residents and developers alike.
AvalonBay Communities’ 695-unit AVA Hollywood at La Pietra Place is the largest project underway. The mixed-use development will deliver in phases, with a final completion date set for late 2022. Encompassing six buildings, the asset will also feature 25,000 square feet of ground-floor commercial space.
3. Westlake North
One of the metro’s most densely populated submarkets, Westlake is adjacent to Downtown Los Angeles, which plays a key role in impacting construction activity in the neighborhood. The spillover from downtown, as well as Westlake’s walkability and a series of city incentives have ramped up development in the submarket. A total of 2,162 units were underway as of January, with 86 percent of those expected to come online later this year, and the remaining slated for delivery no later than 2021.
The largest development taking shape in Westlake North is also the biggest project underway in the metro—GH Palmer Associates’ 1,500-unit Ferrante is rising on a 10-acre site along the western border of the Harbor Freeway, at 1000 W. Temple St. Part of the developer’s Renaissance Collection, Ferrante is scheduled for completion in late 2020.
The submarket is undergoing a serious transformation due to a flurry of development, ranking second on our list. A total of 2,412 units were under construction across 13 projects as of January, with 74 percent of the new supply pipeline being developed by Koreatown-based Jamison Properties. The largest project underway is also a Jamison-development: 2900 Wilshire, a $300 million high-rise developed in a joint venture with Hankey Capital, is slated for completion in 2021 and will feature 644 apartments.
The most densely populated area of the metro is expected to expand its inventory by some 1,100 units in 2020, with the remaining apartments set to deliver the following year. The high concentration of new development—office, retail and hotel, in addition to multifamily—is due partly to the submarket’s transit-friendly score. And with the city’s Transit Oriented Communities program in full swing, developers are drawn to Koreatown—an additional 4,772 units were in the planning and permitting stages at the beginning of the year.
1. Downtown Los Angeles
Topping our list with 2,730 units underway as of January, Downtown Los Angeles is one of the most development-centered submarkets in metro L.A. Last year, a total of 3,504 units were added to Downtown’s inventory, accounting for a whopping 54 percent of the total stock delivered in 2019 across the entire metro. According to Yardi Matrix, some 21,400 units were in the planning and permitting stages as of January.
Officials have been making efforts to relieve the housing-strapped city—last October, the L.A. City Planning Department unveiled its draft of DTLA 2040. The Downtown Community Plan, aimed at revitalizing and boosting the downtown area, would eliminate parking requirements for all of Downtown L.A. by the year 2040. According to the DC BID, downtown will add more than 125,000 new residents, 70,000 new housing units and 55,000 new jobs by 2040. The proposed plan promotes a dynamic and sustainable core, all the while encouraging the development of more housing.
Yardi Matrix covers all multifamily properties of 50+ units in size across 133 markets in the United States. This ranking reflects developments underway within that sample group.