Central Los Angeles submarkets’ demand and growth are fueling the projected 2022 Los Angeles market success
Apartment demand this year is expected to maintain its high 2021 volume in large markets across the nation. According to Berkadia’s 2022 Forecast Report, Los Angeles is projected to have the second-highest annual absorption in the U.S., with nearly 20,885 net units absorbed. The predicted leasing activity would surpass the metro’s pre-pandemic, five-year average of 5,899 net units. Leasing activity is forecast to be strongest in the Downtown Los Angeles, the Mid-Wilshire, and the Hollywood submarkets.
The Downtown Los Angeles submarket has the highest projected demand in 2022 out of Los Angeles’s 20 submarkets. By year-end, apartment operators in the submarket are expected to see over 3,250 net move-ins. The submarket’s high demand is partially due to offering residents closer proximity to the market’s main economic hub, Downtown Los Angeles, which supports over 178,000 full-time employees and houses 22 Fortune 500 companies. Besides being a premier business hotspot, downtown is universally recognized as one of the leading culinary destinations in the world and has a diverse nightlife scene, boasting over 650 dining options. Known for its work-live-play atmosphere, the submarket’s popularity has grown as more builders have added an influx of multifamily housing options to Downtown Los Angeles in recent years. This trend is forecast to continue in 2022, with more than 3,772 projected new units coming online.
Downtown Los Angeles’s neighboring submarkets—Mid-Wilshire and Hollywood—are also forecast to see high leasing activity. The Mid-Wilshire submarket is projected to have 3,132 net move-ins and the Hollywood submarket will have absorption reach nearly 2,000 net units. Residents are attracted to the Mid-Wilshire and Hollywood submarkets for similar reasons as Downtown Los Angeles. Mid-Wilshire is a diverse, centrally located submarket that boasts a youthful population with 32.4% of residents falling between the ages of 19 and 34. The submarket is home to renowned Los Angeles County Museum of Art, which hosts 1.5 million annual visitors, and the Little Ethiopia, offering traditional eateries and a blast of culture. Similar to Downtown Los Angeles, the Mid-Wilshire submarket has been a multifamily housing development hotspot. In 2021, the Mid-Wilshire submarket gained 2,575 new units, the highest inventory increase out of all 20 submarkets in the metro.
The Hollywood submarket is arguably one of the most recognized areas in the Los Angeles area. It has long been known as the center of the entertainment industry and contains popular tourist attractions such as the TCL Chinese Theatre and star-studded Walk of Fame. Besides Hollywood being the larger-than-life symbol of entertainment, the submarket is one of the fastest-growing residential markets as developers have recently invested $4 billion into new residential, mixed-use, and commercial projects, redefining the area. With rental units making up 92.4% of the submarket’s occupied housing, Hollywood’s positive demand and supply growth is predicted to continue in 2022, indicative of the submarket’s transformative success.
For more information, view Berkadia’s 2022 Forecast Report.