by Jodi Summers
new construction is a signal that our recession is coming to an end,
then weâ€™re golden on the West Side of Los Angeles. The Expo Line light
Rail development has been inspiring the construction of new residential
and commercial hubs and new urban hamlets are popping up near the beach.
Hereâ€™s an update on new development on Los Angelesâ€™ West Side.
Sales Statistics and Trends
â– The median price of West Side apartment properties sold in the last
year was $210,400 per unit, up 7% from the previous four-quarters.
â– Cap rates for sold Westside multiunits averaged in the mid-5%
range. Exprest says the statistic emphasizes the strength and stability
of the area.
â– Outlook: More investors will deploy capital in Koreatown this year,
as efforts to redevelop the neighborhood come to fruition. Some local
buyers will acquire less desirable assets at 7% cap rates, then sell at
5% yields after significant Â rehab work.
Rents Will Be Strong
â– Asking rents in the area were 1.3% higher than in 1Q 2011,
averaging $1,929 per month. In 1Q 2010, there was a 0.2% decline in
â– Effective rents gained 2.0% to $1,862 per month in the last 12
months as absorption picked up. Effective rents surged 4.1% in the
â– Concessions have been minimized. The average leasing incentive was
13 days of free rent in 1Q. Bonus to owners > average revenues grew
2.0% since 1Q 2011, an increase from the 0.6% bump of the prior year.
â– Asking and effective rents rose 1.0% and 1.3% last year, with
stronger growth expected in 2012. Asking rents are expected to grow 3.6%
to $1,980 per month, yielding an eff ective rent gain of 3.8% to $1,901
New Construction Will Not Impact Vacancy Rates
â– Westside apartment inventory rose by 161 units in the last 12
months, with 70 units completed in the first quarter. The increase grew
rental stock 0.1%.
â– Nearly 1,700 units are under construction on the West Side â€“ with
the anticipated completion on 2/3rds of the rentals expected in 2013. In
the planning stages are an additional 2,400 market-rate units.
â– A resurgence in local employment, particularly by tech and private
companies, has sparked an increase in household formation. Consequently,
the vacancy rate fell to 3.3% in 1Q.
â– Outlook: The completion of 540 units locally will have minimal
impact on vacancy this year. Vacancy rates on the Westside will tumble
to 2.8% in the 4Q.
Weâ€™re here to help you with your property needs. Please contact Jodi
Summers and the SoCal Investment Real Estate Group @ Sothebyâ€™s
International Realty â€“ firstname.lastname@example.org or 310.392.1211, and let us move forward together.