L.A. Apartment Rents Hit Record Highs in Q1, But Sales Have Stalled
The number of units sold in investment sales in the first quarter dropped by 59% compared to 2023
By Greg Cornfield April 2, 2024 10:25 am
reprints
Apartment asking rents are at all-time high for Los Angeles County, but multifamily investment sales were particularly muted in the first quarter this year, a new report found.
In multifamily investment sales, the average sale price per unit also ticked up while the vacancy rate in the sector remained at 4.8 percent in the first quarter, the same as the previous three months, according to a report from NAI Capital.
L.A. County’s average asking rents increased 0.5 percent quarterly and .03 percent compared to last year, according to the report, bringing the average rent up to a record $2,183 per unit per month. Approximately 2,405 units were added to the market in the first quarter, and a heavy portion of new high-end units caused the increase in the average asking rent.
Still, multifamily property sales in L.A. County saw far lower quarterly transaction volume as the investment side has been hamstrung by construction costs, pessimism from a slowing economy and higher interest rates, the report said. And in the city of Los Angeles, sellers are further dissuaded by an added transfer tax.
The number of units sold in the first quarter dropped by 59 percent compared to the previous year, totaling 3,041 units, with the average sale price per unit increasing by 1.4 percent year-over-year to $312,857. For reference, the number of units sold is 41 more than in the first quarter of 2009 during the Great Recession.
The most notable transactions during the first quarter this year included FPA Multifamily’s $186 million deal to buy a 34-story, 525-unit luxury high-rise in Downtown L.A. from CIM Group; Devonshire Delaware’s acquisition of an 18-unit complex for almost $1.56 million per unit; CityView’s $63 million deal to acquire six apartment buildings across L.A. from Blackstone; and Helio Group acquiring the 135-unit Cobalt Apartments in Culver City for $65 million.
On the financing side, Trammell Crow and R&V Management sponsored a $200 million package to build a 600-unit development in Downtown Long Beach; Housing Diversity Corporation secured $100 million from multiple sources to build two micro-unit housing projects in Downtown L.A.; and Greystar and Resmark Companies landed a $95 million loan to build 259 multifamily units and 64 townhome units in Santa Clarita.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
