Multifamily Cap Rates Rise in Los Angeles to Close the Year
Q4 2023
Highlights:
- The Los Angeles multifamily market closed out a soft year with some mixed performance in the fourth quarter. Rents continued to dip, but vacancy rates showed a slight improvement in the final few months of 2023. Transaction activity inched higher but lagged historical levels.
- Vacancy rose 60 basis points in Los Angeles County in 2023, but the rate inched lower during the fourth quarter. Vacancy ended the year at 4.1%. The vacancy increase in 2023 followed two consecutive years where the rate tightened.
- Asking rents ended the year on a downward trend, decreasing by 2.6% in 2023 to $2,393 per month. Rent declines were recorded across most of the county’s major submarkets in 2023.
- While multifamily transaction activity in Los Angeles bounced off of earlier lows in the fourth quarter, annual sales were down more than 40% from levels recorded in 2022. Cap rates have pushed higher, averaging between 5.5% and 6% in the fourth quarter.
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