To the dismay of some and excitement of others, apartment construction continues to boom both nationally and locally, with Santa Monica noted as a particular growth area in Los Angeles County.
According to a new report by RentCafe, developers throughout the United States are on track to complete 518,108 rental units, with 2024 expected to be the first year in the country’s history to surpass 500,000 constructed units. Since a low point of 126,000 units developed in 2011, the US has been on a consistent upswing, and is now seeing higher construction rates than even the mid-1980s development boom period.
Of this boom, California was noted as the fourth-largest contributing state, with Los Angeles ranking as the 17th-highest US metro for new apartments in 2024 (8,924 in total). The top two metros, New York City and Dallas, both outpace the rest of major cities by far with nearly 33,000 units constructed in both areas.
The outlook for 2024-2028 brings Santa Monica into the equation in a big way. Though Long Beach has the most units planned for that stretch of time (3,476), Santa Monica showed a 17.7% increase from its 2019-2023 unit construction (1,126) to its projected 2024-2028 number (1,325). Woodland Hills was seen as another growth point, while LA-area cities like Pasadena, Inglewood and Canoga Park were noted as significant downtowns in the outlook.
Construction is continuing at a rapid pace entering the final months of 2024, such as the continued progress done at 710 Broadway. Scheduled to be completed in late 2025, the 2.5-acre site headlined by a Vons supermarket also encapsulates 280 units in all, 84 of which will be affordable housing. The often traffic-lane altering 1650 Lincoln Blvd construction, with 98 units in tow, is also scheduled to welcome tenants in 2025.
A combined 320 apartment units went through the Architectural Review Board last week, both within a five-block radius on Wilshire Blvd. The first, a Cypress Equity Investments project from 2025-2033 Wilshire Blvd that holds 150 units in an eight-story, mixed-use building.
Calling for the clearing of commercial buildings currently occupied by Chipotle and Veggie Grill, the project was initially shot down in May by the ARB, with the applicant then "mitigating concerns regarding scale and massing" as well as design sensitive to impacts from neighboring development (such as vehicle headlight glare).
The other, a 170-unit project at 2501 Wilshire Blvd also holding grocery store and retail/restaurant space, returned to the ARB after a May 20 review, in which the board desired the project "relate to the neighborhood in a more meaningful way."
As to be expected with an enormous population to serve, Los Angeles’ metro area is running circles around California competition in the construction race. The 8,924 new units in the area is far above second-place San Francisco (5,078 units) and third-place San Jose (3,384). The beachside city of San Diego (3,226) and the capital city of Sacramento (2,833) round out the top five in the Golden State.
While the nationwide apartment numbers are at an all-time high, that peak is not poised to last. Although the report states that developers are taking advantage of better negotiations with land sellers and reduced labor costs at the moment, the "construction landscape" will likely change soon after.
"Most markets won’t see the impact of rapidly falling starts translating to lower completion levels until the second half of 2025, and more likely in 2026," Senior Analyst & Manager of Business Intelligence at Yardi Matrix Doug Kessler said. "All said, this massive drawdown in starts across all regions sets the stage for a very different industry trajectory come 2026 and 2027."
thomas@smdp.com
