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\n Courtesy of High Street Residential\n <\/p>\n
\n High Street Residential started work on a 281-unit project in the San Pedro neighborhood.\n <\/p>\n
It also reveals the fact that although California, and particularly Los Angeles, has gained a reputation on the national stage for an unfriendly business climate, there are still developers ready and willing to invest in the area.\u00a0<\/p>\n
\u201cA lot of folks have kind of decided to not underwrite what they consider to be some political risk associated with the city of LA,\u201d said Alex Valente, partner at High Street Residential<\/a>, which has a 281-unit project underway in LA. \u201cThose of us that know the city as well as we do and have as much confidence as we do in the city and the lifestyle here \u2026 I think we feel really good about it.\u201d\u00a0<\/p>\n Like the rest of the country, Los Angeles County was awash in new construction in 2024 and 2025, resulting in a construction pipeline of\u00a0more than 26,000 units by the beginning of the latter year. That number ticked down to around 24,000, but while developers slowed their activity in other regions<\/a> to allow the supply to be absorbed, they are gearing back up in LA County.<\/p>\n The number of LA-area apartment starts in the first quarter was roughly twice what it was\u00a0a year ago, by Colliers\u2019 count, jumping from 2,000 units to 4,000, according to Colliers.\u00a0Colliers tracks multifamily activity across greater Los Angeles, including submarkets outside city limits.<\/p>\n Nationwide, the number of starts was up just 20% annually in March, according to the Census Bureau.<\/p>\n Multifamily operators nationwide have slowed their pace after delivering an estimated 600,000 units in 2024<\/a>. That supply glut, much of which was concentrated in the Sun Belt, collided with slowing job growth and macroeconomic strife.\u00a0\u00a0<\/p>\n These factors have converged on the market to produce lower-than-expected rent growth over the last year. National average apartment rents fell annually in April by 1.7%, according to ApartmentList, the lowest growth rate since the organization<\/a> began tracking in 2017 \u2014 including the worst days of the pandemic.\u00a0<\/p>\n Greater LA rents have similarly dropped, ticking down by 1.4% year-over-year in April. But compared\u00a0to former hot spots like Austin and Phoenix, down 5.7% and 4.4%, respectively,\u00a0Southern California\u00a0looks like a safe haven for development dollars, despite the litany of issues the real estate industry says it has in the city.<\/p>\n \u201cAnybody who’s investing in or developing in LA who starts in the short term, the near term, now, will be rewarded, be delivering in a window two years from now when there is less new supply or competition,\u201d Valente said.\u00a0<\/p>\n The regulatory environment in Southern California has long been a complaint among the business community, including commercial real estate.\u00a0<\/p>\n Some landlords are seeking to leave the state altogether. Camden Property Trust<\/a> in\u00a0January said it would\u00a0sell its entire $1.5B portfolio<\/a>\u00a0in California and cease operations in the state. The company didn\u2019t provide a reason for its departure, but in earnings calls, its executives have referenced the state\u2019s regulatory environment as an impediment.<\/p>\n Similarly, in 2024,\u00a0Wood Partners said it wouldn\u2019t pursue new<\/a>\u00a0opportunities in California. Investment volume in Los Angeles-area apartments also dropped steeply after Measure ULA<\/a> was passed, according to Colliers.<\/p>\n The implementation of Measure ULA, often called the \u201cmansion tax,\u201d in April 2023 touched off a fresh wave of consternation. The rule added a 4% levy on transactions of more than $5M and a 5.5% tax on transactions over $10M.<\/p>\n In the two years following Measure ULA\u2019s effective date, commercial transactions in Los Angeles\u00a0dropped between 30% and 50%<\/a>, according to UCLA. Backers of the measure say the slowdown had more to do with the\u00a0commercial real estate industry waiting to see if the measure would be overturned than a meaningful representation of a drop in interest. \u00a0<\/p>\n Los Angeles was also the last major city to lift its eviction moratorium in the wake of the pandemic and is known for its influence over rents. In November, the Los Angeles City Council voted to put a 4% ceiling on annual rent increases for rent-stabilized apartments in the city. The decision would affect roughly 651,000 units, or nearly 74% of the city’s total.<\/p>\n But the stubborn imbalance of supply and demand in the LA-area housing market is bringing back local builders\u00a0that saw their opportunity.<\/p>\n \u201cIt gives us even more confidence on the projects that we are able to start,\u201d Valente said. \u201cWe’re going to deliver into this window of not having too many other new, competing projects with new, top-of-the-market and top-line amenities.\u201d<\/p>\n High Street and joint venture partner Haseko North America broke ground in\u00a0the first quarter\u00a0on the 281-unit Jules San Pedro<\/a>.<\/p>\n San Pedro is a neighborhood of Los Angeles that offers access to the South Bay where aerospace and defense companies are expanding, and is poised to capture some of those potential residents. The neighborhood\u2019s population grew by\u00a02.4% from 2020 to 2024<\/a>, according to the city of Los Angeles.<\/p>\n These trends highlight some of the migration patterns that developers look for when deciding where to build.<\/p>\n \u201cWe’re kind of figuring out where that migration is. And I think with these new projects and as developers cater to the needs and wants of the young professionals and the young families, I think we’ll start to see demand shift and see where the true migration is,\u201d Colliers<\/a> Senior Research Director Matt Nelson said.\u00a0<\/p>\n Despite the city\u2019s history of undersupply and High Street\u2019s track record, it can still take convincing to get investors on board when the larger narrative about Los Angeles is so fraught.<\/p>\n \u201cIt’s a lot of making sure folks, including our investors, have confidence and conviction in what we’re building, why we’re building it and where we’re building it,\u201d Valente said. \u201cIt doesn’t feel like a big stretch in my mind to kind of see why we think this will be successful.\u201d\u00a0<\/p>\n Greater Los Angeles\u2019 position as an outlier to the national multifamily construction trend also means that would-be buyers coming to the market are disappointed by the property values they find in the area.\u00a0<\/p>\n There are lots of new entrants to the LA-area multifamily market, but those buyers aren\u2019t necessarily submitting winning bids or even making offers, according to Newmark<\/a> Vice Chair Dean Zander<\/a>.<\/p>\n Investment volume in LA-area apartments was roughly flat at $8B for the last two years, compared to $12B in 2021 and 2022, according to Newmark.\u00a0\u00a0<\/p>\n \u201cInvestors from other states are coming here to kick the tires and see where the values are, but they’re generally not executing \u2026 because we just don’t have those fire sale opportunities that other places might,\u201d Zander said.\u00a0\u00a0<\/p>\n UPDATE, APRIL 30, 3:33 P.M. PT:\u00a0This story has been updated to more precisely describe the geographic boundaries included in Colliers’ data.<\/p>\n","protected":false},"excerpt":{"rendered":"New apartment construction in greater Los Angeles is heating up \u2014 and bucking nationwide perceptions in the process.\u00a0…\n","protected":false},"author":2,"featured_media":297000,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[125936,19287,125933,125932,48,52,51,47,125935,50,3717,49,25892,125934,8866],"class_list":["post-296999","post","type-post","status-publish","format-standard","has-post-thumbnail","category-los-angeles","tag-alex-valente","tag-colliers","tag-dean-zander","tag-high-street-residential","tag-la","tag-la-headlines","tag-la-news","tag-los-angeles","tag-los-angeles-construction","tag-los-angeles-headlines","tag-los-angeles-multifamily","tag-los-angeles-news","tag-matt-nelson","tag-multifamily-development","tag-newmark"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/296999","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=296999"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/296999\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/297000"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=296999"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=296999"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=296999"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/p>\n