Equity Residential has high hopes for LA rental growth
Equity Residential’s top brass is feeling better than ever about the state of the L.A. rental market, thanks to strong supply and demand fundamentals.
“Los Angeles fundamentals appear to be coming on strong with the anticipation of a breakout year for the L.A. economy and the pro-business city government, and the rebranding of Downtown as a world-class city coupled with meaningful additions to infrastructure and transportation,” COO David Santee said during the company’s first quarter earnings call Wednesday.
Santee said he’s “optimistic” that the L.A. market can absorb 7,600 new units slated for delivery in 2016. Rents for new leases and occupancy levels across the company’s L.A. portfolio are already up year-over-year.
“Given the concentrated nature of deliveries in the South Park and Hollywood submarkets, we see no major hurdles to strengthening fundamentals in revenue growth as net effective new lease rents are up 7.3 percent with both occupancy and exposure significantly better positioned versus the same week last year,” he said.
Meanwhile, Forbes just named L.A. the fifth worst city in the U.S. for renters. The average rent is currently around $1,892, a 6 percent uptick since last year and about 39 percent of the area’s average income of $58,023.
Equity Residential has been putting its money where its mouth is. The Chicago-based real estate investment trust recently acquired a 298-unit apartment complex in Hollywood for $98 million, or $328,859 per unit, The Real Deal previously reported. The building, dubbed Vantage, is located at 1710 North Fuller Avenue.
Another of its new projects, Altitude at Howard Hughes Center, contains 545 new residential units and is nearing completion.
Elsewhere in the U.S., Equity is facing supply-related hurdles. On the west side of Manhattan for instance, the company said rents may remain flat in 2016 as inventory mounts.
“The performance of our Manhattan portfolio will be greatly influenced by almost 2,000 new units on the Upper West Side, which makes up almost 30 percent of total revenue for our New York Metro area,” Santee said.