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Current Multifamily Market Rents and Vacancy Rates in Los Angeles (2025)




The Los Angeles multifamily market continues to exhibit stability despite ongoing economic pressures and recent disruptions caused by natural disasters such as the early January fires. Below is an in-depth analysis of the current rental rates, vacancy trends, and differences between property classes across the city.


1. Current Market Rents Overview

The average market-wide asking rent for multifamily units in Los Angeles stands at $2,306 per month, with an effective rent of $2,290 per month, reflecting an annual growth of 1.0%. This moderate growth rate is in line with national trends but below the city's historical average of 2.4% per year.


2. Rental Rates by Property Class

The Los Angeles multifamily market is segmented into three primary quality categories based on property age, amenities, and overall condition:

a. 4 & 5 Star Properties (Luxury High-End)
  • Asking Rent: $3,315 per month

  • Effective Rent: $3,285 per month

  • Vacancy Rate: 8.7% (down from 10% in Q2 2023)

  • Key Trends:

    • These properties, which include luxury amenities such as fitness centers, concierge services, and premium locations, attract higher-income renters.

    • Despite their premium positioning, rent growth has been sluggish at 0.8% year-over-year due to higher vacancy rates.

    • Locations such as Downtown Los Angeles and Beverly Hills have seen relatively high vacancies due to a significant increase in new luxury developments.


b. 3 Star Properties (Mid-Range)
  • Asking Rent: $2,410 per month

  • Effective Rent: $2,396 per month

  • Vacancy Rate: 5.0%

  • Key Trends:

    • Mid-tier properties cater to a broader market segment and offer a balance between affordability and amenities.

    • These properties have seen stable demand with no significant new deliveries, maintaining their occupancy levels.

    • The rent growth has been modest compared to the luxury sector, with working professionals being the primary tenant base.


c. 1 & 2 Star Properties (Affordable/Older Inventory)
  • Asking Rent: $1,796 per month

  • Effective Rent: $1,787 per month

  • Vacancy Rate: 4.3%

  • Key Trends:

    • Lower-end apartments primarily serve budget-conscious tenants, including students, low-income families, and retirees.

    • These units experience relatively high demand due to affordability concerns and a growing population of cost-sensitive renters.

    • Rent growth has been stagnant at 1.0%, with financial pressures limiting further increases.


3. Vacancy Rate Analysis

Los Angeles currently has an overall vacancy rate of 5.1%, reflecting stable market conditions. However, vacancy rates vary widely across property classes and submarkets:

  • 4 & 5 Star Properties: 8.7% – The highest vacancy rates, mainly due to over-supply in luxury units and economic constraints among high-end renters.

  • 3 Star Properties: 5.0% – Relatively balanced demand, with stable absorption rates.

  • 1 & 2 Star Properties: 4.3% – Lower vacancy, reflecting continued demand for affordable housing options.


Submarket Vacancy Rates:
  • San Fernando Valley: Tight vacancy rates of around 4%, with average rents between $1,700 - $2,200/month.

  • Downtown LA: Higher vacancy rates of over 7%, driven by the influx of new high-end units and slower demand recovery.

  • South Los Angeles: Low vacancy rates around 2.5-3.5%, offering better affordability for renters.

  • Beverly Hills/Century City: High vacancy of approximately 7.5%, reflecting premium pricing and limited tenant affordability.


4. Submarket Performance and Trends

Rental demand varies significantly by location:

  • High-Performing Submarkets (Low Vacancy, Steady Rent Growth):

    • South Los Angeles, North San Fernando Valley – Moderate rent growth of 2-3% annually, with minimal construction activity.

    • Mid-Wilshire – Continues to attract middle-income renters looking for affordability within proximity to employment hubs.

  • Challenged Submarkets (High Vacancy, Stagnant Growth):

    • Koreatown – Experienced a -1% rent decline due to an influx of new supply and higher vacancies (~6%).

    • Downtown Los Angeles – Faces competition from new luxury units, with rents averaging $2,800/month but limited tenant demand.


5. Market Outlook and Projections

Looking ahead, the Los Angeles rental market is expected to experience moderate improvements:

  • Vacancy Forecast:

    • Expected to decline slightly to 4.8% by the end of 2025, driven by a reduction in new supply and steady demand.

  • Rent Growth Projections:

    • Anticipated to accelerate beyond 3% in the second half of 2025, particularly in mid-tier and lower-end segments as economic conditions stabilize.

  • Supply Considerations:

    • New construction is slowing due to higher financing costs and regulatory challenges, which should support existing asset performance.


6. Key Factors Influencing the Market

Several external factors are impacting the current market dynamics:

  • Economic Conditions:

    • Job losses in the entertainment and tech sectors continue to limit renter demand, particularly for higher-end properties.

  • Affordability Challenges:

    • Rising living costs and economic uncertainty have led to increased outmigration, particularly among lower- and middle-income households.

  • Natural Disasters:

    • The recent fires in Pacific Palisades and Altadena destroyed thousands of units, pushing displaced homeowners into the rental market, which could temporarily increase demand in neighboring communities.


7. Summary of Current Rental Trends in Los Angeles

Property Class

Asking Rent (Monthly)

Effective Rent (Monthly)

Vacancy Rate

Annual Rent Growth

4 & 5 Star

$3,315

$3,285

8.7%

0.8%

3 Star

$2,410

$2,396

5.0%

Stable

1 & 2 Star

$1,796

$1,787

4.3%

1.0%

Overall Market

$2,306

$2,290

5.1%

1.0%

Conclusion

The Los Angeles multifamily rental market remains stable with modest growth trends, but challenges such as economic pressures, affordability issues, and natural disasters continue to create uncertainty. While higher-end properties face headwinds due to high vacancy rates, the demand for mid-tier and affordable housing remains strong, positioning those segments for more stable performance in the near future.


The market is expected to see steady improvement, with rent growth surpassing 3% by late 2025, and vacancy rates trending downward due to reduced new supply and consistent renter demand.


January 20, 2025 by Michal Mohelsky, J.D. Principal of MMCG Invest, LLC

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