Yardi Matrix: Investment Flies High in LA
- Mar 23, 2017
Fueled by strong housing demand and continued gains across employment sectors, the Los Angeles economy is well positioned to grow. Investors have taken a liking to the metro’s apartments, pushing sales volumes and per-unit prices to cyclical highs. However, widespread rent growth is pricing residents out of the urban core, leading to significant growth in the eastern regions of Los Angeles County and the Inland Empire.
The influx of startup firms and the upcoming Snap initial public offering have driven the metro’s tech sector to new heights. Widely known for its entertainment industry, the metro took a major step in the sports arena as the National Football League’s Rams returned in 2016, and the Chargers are set to move to Inglewood’s new City of Champions stadium in 2017. The development will reshape Inglewood, as multiple apartment complexes along with retail and outdoor recreation facilities are currently under construction.
Underpinned by rising demand, development activity is at its highest point this cycle. The pipeline consists of more than 70,000 units, which will produce continued inventory expansion for years. Despite the significant new development, the rate of expansion is in line with the national average, meaning that rent pressure will continue in 2017. As a result, we expect rents to increase 5.5% this year.
Read the full Yardi Matrix report.