Landlords in the Los Angeles area are increasingly letting renters stay for free as the area’s rental real estate market gets even more fiercely competitive. At the recently opened Hanover Olympic and the Sare-Regis Group’s Wakaba LA apartment buildings, renters can get the first month’s rent free.
The downtown development boom is turning landlords against each other in a Games of Thrones-style death match to see who can attract the most renters. Last year saw a record 2,000 apartments added to the rental pool in downtown L.A., and another 1,688 have already been added so far in 2016, according to Transwestern Research Services. 2016 is set to be another record-breaking year for new rental construction in the Downtown region. Real estate observers say the competition will only get more intense as current development projects conclude and bring even more rental units online.
In the last 18 months, 3,700 new apartments have opened in Downtown L.A., and another 6,260 are currently under construction. When completed, they’ll boost the number of Downtown residences, for sale and rentals, by about 15% to a total of 40,000. Thousands more are planned in the coming years.
Although promotions like a free month’s rent are not widespread, the new wave of rental housing should make them more common over the next year. Until now, demand outpaced supply by such a wide margin that landlords could afford not to make concessions to renters.
Outside the Downtown area, rents are climbing fast and landlords have few incentives to offer deals. The median rent for multifamily units citywide rose 7.2% in June from its level last year, to $2,446. The median rent in Downtown, on the other hand, only climbed 3% in June, to $2,437 per month. Overall, rent growth is still stronger in L.A. compared to San Francisco and New York, and the slowdown appears only concentrated in Downtown.
The main reason is that it’s simply easier to build up Downtown. Vast parts of the district are coded for high-intensity residential construction and current residents are largely welcoming of the new apartments. A permissive development environment and the explosion of restaurants, clubs and new residents has made the idea of living Downtown a lot more appealing to many Angelenos.
There’s a lot more demand for Downtown living than there was 10 years ago, when new housing construction in the district was anemic at best. The 6,260 apartments now under construction are 1,000 more than all the new apartments and condos that opened in the Downtown area between 2002 and 2009, according to data from Transwestern.
And there’s still room to grow, because Downtown simply has more peoples than housing units. About 500,000 people visit the district on any given weekday, but there are only 36,000 housing units and 61,000 permanent residents. The building boom looks to continue for years to come.
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(all data current as of 7/23/2017)
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