New Supply Pressures LA Multifamily Occupancy, but Construction Is Slowing
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Deliveries remain high in Los Angeles' multifamily sector, which is putting pressure on fundamentals. But on the bright side, construction is starting to slow down, according to a third-quarter market report from Colliers.
Overall, new supply came in at 4,277 units. While down from the 5,516 delivered in the same period a year ago, the level is up significantly from the 2,487 units seen in the second quarter.
Particularly, occupancy went lower, dropping 30 basis points year-over-year to 94.4 percent. The Hollywood/Mid-Wilshire and Westside submarkets posted the biggest occupancy declines, with the year-over-year rate dipping by 1.7 percent and 1.1 percent, respectively, in the third quarter.
"Sustained new supply continues to pressure the market," Colliers simply put it in its report.
While absorption came in higher at a positive 3,809, it failed to outpace the incoming supply.
Average monthly effective rents were flat versus the third quarter of 2025, at $2,428.
But here's the good news for LA landlords: the rate of construction is slowing. Just 23,426 units were underway versus 25,421 units a year ago.
"Since Q2 2021, Los Angeles County has delivered more than 58,800 units to the market although the amount of new construction has slowed from just two years ago when over 31,000 units were underway," Colliers said.
The other bright spot is investment activity, with sales volume coming in at almost $3.3 billion year-to-date, although the average price per unit slipped to $357,085. Sales volume is up 44 percent from the previous period.
Like other multifamily Sun Belt markets, Los Angeles has faced heavy new supply due to post-pandemic demand. However, many of those markets, including LA, are starting to see a slowdown in deliveries.
For local investors, that bodes well for stronger future fundamentals and the transactional environment is active as a result in LA, although it remains to be seen how higher interest rates will impact activity in the coming months.
Source: GlobeSt/ALM