Renters in Los Angeles are gravitating towards higher-end, luxury apartments.
Renters seeking top-tier apartments have been a crucial driver of apartment demand, with vacancies in four- and five-star ranked apartments falling to 8.6 percent this month, from 10 percent last summer, CoStar News reported, citing its own data.
Demand for higher-end apartments in L.A. bucked national trends — vacancies of higher-end apartments across the country have increased in the wake of new apartment construction.
In the past 12 months, L.A. renters signed leases for 8,300 apartments at four-and-five-star properties, which make up 15 percent of the L.A. apartment market, according to CoStar. Developers completed 8,600 higher-end units in the same time period.
While renters gravitated toward luxury complexes, they stayed clear of some of the lower-end apartments. CoStar News did not define the specific categories of its five-star apartment ranking system.
It said vacancies continued to rise in lower-end one-and-two-star and mid-end three-star buildings.
In the past year, one-and-two-star properties, which make up 65 percent of the Los Angeles market, had “negative demand” of 2,900 units.
Three-star properties, comprising 20 percent of the market, had “modest, positive demand” for 320 apartments.
Lower and middle-income residents face greater budget constraints, with rents still near record levels. Such renters continue to move from greater L.A. to more affordable cities further away.
Los Angeles apartment rents, which fell for four consecutive months at the end of last year, have rebounded, according to CoStar.
Average asking rents in Los Angeles rose 0.4 percent on a per-square-foot basis in February, following 0.2 percent growth in January, reversing the four-month decline. Nationally, rents rose for three consecutive months since late last year. In February, they were up 0.8 percent year-over-year, and 0.3 percent from January.
— Dana Bartholomew
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