According to MPF Research, developers will have delivered 6,000 new Los Angeles multifamily units in 2015. Yet, developers obtained permits for only 7,200 units in 2013 and 9,500 units in 2014 and 14,000 units in 2015. The pipeline grows but nothing comes out of the other end. The problem is that the time to process and build apartments has increased. Apartments, like oil, suffer from the hog cycle problem. By the time developers can deliver the units– the demand may have already already changed. In 2015–according to MPF Research–demand exceeded 9,000 units and further reduced vacancy from 3% to 2.7%. Developers need the economy to be still humming when they finally can deliver these units.
I speculate that developers will file permits for 17,000 units in 2016. The apartment new supply will be the greatest since the 1980s and will be delivered in 2017 through 2019. According to Marcus and Millichap–over 15,000 units are currently under construction. M & M anticipates the 6,800 units will be delivered in the Greater Downtown Region alone.
This new housing translate into 12,000 new Greater Downtown residents (includes parts of Northeast LA like Echo Park and Silver Lake). Indeed, Downtown is the new growth area for Los Angeles–a new young community within an old one.