Space and Livability Give Certain LA Submarkets an Advantage Over Others
Renters are prioritizing space and livability over proximity premiums, which is why family-friendly and value-driven submarkets like Northridge, California, are surging, while lifestyle-centric pockets are showing slower growth, according to Jay Pedde, head of operations at Veritas Investments/True Residential.
In Veritas' portfolio, which is concentrated in Santa Monica, West Hollywood and the surrounding Westside submarkets, Pedde is seeing that dynamic firsthand.
West Hollywood and West LA have posted solid rent increases of just under 4 percent, but when blending in Santa Monica, Redondo Beach and Marina del Rey, the portfolio-wide rent growth is essentially flat.
He said the more encouraging signal is occupancy. Rent-ready occupancy across Los Angeles has climbed over three percentage points in the past 12 months, "which tells us demand is building even though rents haven't caught up yet," Pedde told GlobeSt.com.
"Hopefully, the near-term story in Los Angeles multi-family is normalization. We went through a similar cycle in San Francisco, where smaller units lagged while larger, work-from-home-friendly apartments commanded premiums, and the AI boom jump-started the market in earnest last spring. LA's sprawl and submarket diversity make those gaps more pronounced, but the trajectory is the same."
Another factor making the outlook for Los Angeles more optimistic is the economic ramp-up to the 2028 Olympics.
The Southern California Association of Governments (SCAG) projects that the games will generate $13 billion to $18 billion in additional GDP across Southern California between now and 2029, with Los Angeles County capturing the largest share.
In 2028 alone, the area is expected to add roughly $9 billion in GDP and approximately 75,000 jobs. These jobs will be heavily concentrated on construction, professional services and the service sectors that drive apartment demand in these submarkets, Pedde said.
"Critically, that spending isn't confined to the summer of 2028," he said.
"Transportation investments, temporary construction, and operations spending are already ramping up. For multifamily operators, the benefit will be real: more employment, stronger service-sector wages, and increased investor attention around venue-adjacent and transit-served nodes."
Pedde said he's seen the lift that large investments into other sectors of the economy provided to his Bay Area assets and he expects Los Angeles to follow that pattern as Olympic-driven economic activity accelerates over the next 24 months.
Source: GlobeSt/ALM