LA Multifamily Sales Dip 32% as Deliveries Surge
Investment activity for multifamily in Greater Los Angeles is starting to decline as supply floods the market. Volume in the year-to-date through the third quarter plunged by 32 percent to $4.2 billion, versus the same period 12 months ago, according to a report from Colliers.
The decline in investment activity came as multifamily deliveries surged to 5,292 units in the third quarter, versus 3,218 a year ago. Also, the high supply appears to be weighing on demand and pushing up vacancy, as net absorption fell to 2,420 units compared with 3,902.
"Net absorption has failed outpace new supply in five of the past seven quarters, pushing occupancy down 30 basis points from 95.2% in Q1 2024," Colliers explained.
The Westside and Hollywood/Mid-Wilshire submarkets are averaging the lowest vacancy rates in Greater LA, at 94.1 percent each. South Los Angeles is seeing the highest occupancy, averaging 96.8 percent.
While modest, average rents per unit climbed by 0.7 percent year-over-year to $2,294 was one positive.
Another positive is that construction is slowing, down to 26,226 units, from 32,632. But Colliers noted that the activity remains "robust."
Meanwhile, cap rates were flat at 5.7 percent.
Source: GlobeSt/ALM