Page 80 - AAGLA-MAY 2022

Member Update
80
MAY 2022 • WWW.AAGLA.ORG
Apartment Demand Cools as Rent Growth
AContinues to Soar
By Jordan Brooks, Senior Market Analyst, ALN Apartment Data
fter a historic 2021 for the multifamily housing industry in which both apartment demand and rent growth absolutely exploded, 2022 has gotten off to a decidedly different start. At the national level, stratospheric rent growth has continued but decoupled from apartment demand that has considerably
cooled. While demand has been more resilient so far in some markets, the Greater Los Angeles area largely resembled the nation as a whole in the opening quarter of 2022.
All numbers below will refer only to conventional multifamily properties of at least 50 units. Geographically, the Los Angeles – Long Beach – Anaheim metropolitan statistical area (MSA) will be covered.
New Supply and Net Absorption Lacking
One area is which the Los Angeles Area did not approximate national industry performance in
the first quarter was new supply.
Whereas new deliveries were
down considerably compared to recent years for the U.S., about 2,100 new units delivered in the Greater Los Angeles Area was right around the average established over the last three years for this portion of the calendar. Eight of 32 submarkets tracked by ALN Apartment Data for the area saw some level of new supply, but deliveries were concentrated in the Greater Downtown submarket in Los Angeles, the location of slightly more than half of the new units delivered.
Net absorption of approximately 1,500 units in the quarter was a far cry from the 3,200 net unit average from 2019 through 2021 for the first quarter but exceeded the roughly 1,100 net units absorbed in the first quarter of 2018. The three-year average of 3,200 net units was of course skewed upward by last year’s almost incomprehensible 5,100 net units absorbed, but even so, this year’s total was lower than any opening quarter of the last five years except for 2018.
Unlike in many markets around the country, the Los Angeles MSA did not suffer negative net absorption in any of the four price classes. Price classes A, B, and C all underperformed the first quarter of 2021’s performance, but Class D managed to add about 170 net leased units versus the same period in 2021. In terms of total units, the 1,100 or so net units absorbed in the Class A segment led the way. The most dramatic drop-off from last year was in the Class B space. After a net gain in the number of rented units of almost 1,900 in the first three months of last year, less than 300 net units were absorbed in the first quarter of 2022.
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