LA roundup: Downtown oversupply concerns, Google closes on former Howard Hughes’ hangar … & more

From the July issue: Report: Downtown L.A. multifamily market in danger of oversupply

For a while, it seemed like a new luxury high-rise, complete with the obligatory infinity pool and sky-high rents, was announced in Downtown Los Angeles every week. There were 1,500 high-end units delivered in the past year, and more than 6,000 are currently under construction, according to CoStar Market Analytics.

But now, Downtown’s multifamily market risks becoming oversupplied, especially on the luxury end, Steve Basham, senior market analyst at CoStar Group, said in a recent report on the submarket.

The unprecedented rate of new construction has caused vacancies to rise and rental growth to slow, according to the report. Vacancy was a low 4.1 percent in 2013 but rose to 6.7 percent in 2014 and 6.9 percent in 2015. CoStar Market Analytics projects that it will rise above 7 percent this year.

This could put a damper on the enthusiasm that swirls around the revitalization of Downtown L.A. Basham noted that only luxury units are being built, but Downtown L.A. has a long way to go before it can be considered a luxury neighborhood. “As the affluent millennials who are helping drive the Downtown boom begin to age and start families, a vibrant nightlife will become less important than good schools, safe streets and green spaces,” he said. [more]