Downtown LA Hits Highest Vacancy Rate Since 2000

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A real estate research firm has reported that downtown Los Angeles has a 12 percent vacancy rate, its highest recorded in 17 years. 

KPCC reports that updates to zoning laws have made taller and denser building possible in the area, resulting in a concentration of new rental construction. New buildings are being built on surface parking lots and are replacing run-down buildings that have been torn down.

In addition, due to less neighborhood opposition than other parts of Los Angeles, the vacancy rate of the downtown area is three times higher than the rest of the city, which has a rate of about 4 percent.  

The 12 percent vacancy rate, which was reported by real estate research firm CoStar Group, is the result of supply outpacing demand since 2014. A report by the Downtown Business Center Business Improvement District shows that 2,000 of over 21,000 market-rate rentals are empty under the current vacancy rate.

The average rent of a one-bedroom apartment in the downtown area is $2,500. According to CoStar senior market analyst Steve Basham, such high figures are a key factor in the high vacancy rate. 

"The stuff that’s being built right now is really targeting the very top of the renter’s pool," he said. "The majority of the renters in [Los Angeles] are not going to be able to afford that."

In fact, not being able to afford a home at all is also a problem in Los Angeles. According to LAist, a study released in May 2017 by the Los Angeles Homeless Services Authority shows that downtown Los Angeles had a 20-percent rise in homelessness from 2016 to 2017. 

The downtown area also currently has the largest concentration of homeless people in the nation. 

Such figures have sparked concern amongst community members. For example, Thelmy Perez and her group, the Los Angeles Community Action Network, protested plans for the construction of a residential high-rise before the Department of City Planning on Sept. 14, reported KPCC. According to the plans, 89 percent of the complex's units would be luxury spaces.

"We're continuing to see double-digit increases in homelessness," Perez said. "This is not the kind of project we need downtown, especially considering the vacancy rate is so high."

Although the vacancy rate is currently high, some of those who work in the industry do not think that it will stay that way for long. Basham said that although vacancies could keep growing in 2018, construction should fall off in 2019, resulting in supply catching up with demand.

He said he predicts that more of the people that already work in the downtown area will likely decide to try to live closer to their jobs and that the area's proximity to 2028 Olympics sporting venues will spark additional interest.

Sources: KPCC, LAist / Featured Image: Peretz Partensky/Flickr / Embedded Images: Adan Garcia/FlickrPedro Ribeiro Simoes/Flickr

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