Multifamily Market Overview

San Fernando Valley

Over the past three years, the North San Fernando Valley (SFV) submarkets have seen consistent growth in investor activity. The estimated price of all properties in the Greater Northern Los Angeles area has risen dramatically since, while vacancy rates have dropped over the past four quarters. The North Hills/Panorama City submarket boasts the lowest vacancy rate, presently sitting at 1.3 percent. Furthermore, construction for multifamily properties has finally picked up after minimal units were delivered in the past 12 months. The submarket has also seen significant apartment development activity in recent years, particularly in North Hollywood, where a number of larger communities have delivered.

Vacancy & Rent

Rent growth in North SFV has enjoyed a remarkable stretch. Apartment rents posted gains of seven percent over the past 12 months, outpacing the 4.8 percent annualized average over the past three years. Today, rents are 53.2 percent higher than they were ten years ago, which is significantly ahead of the long-term performance in the metro, where rents increased by 39 percent over the past decade. On average, apartments run for about $2,040 per month, just below the L.A. metro average. Looking ahead, rent growth is anticipated to remain strong through 2022 and 2023, as vacancies remain at historical lows.

Sales Volume

Historically, buyers and investors alike have scooped up multifamily assets in North SFV. Sales volume has averaged $36.9 million in the last 5 years, and the 12-month high for deal volume over that period reached $57.2 million. The Studio City/North Hollywood submarket saw $407 million worth of multifamily property sales during the past 12 months, while Sherman Oaks witnessed $135 million worth. Market pricing per unit in the North Hills/Panorama City Submarket was $280,000 per unit, which is among the cheapest seen in Los Angeles County on a per-unit basis. Looking ahead, average market pricing is anticipated to continue to see robust gains for at least the near to midterm. Investor demand for properties will likely remain strong given expected favorable market conditions.

Construction

Although there was an increase in developer activity in recent years, as well as significant investor interest, minimal properties have been developed over the past 12 months. However, construction is picking up with the addition of The Link at Sylmar, an apartment complex that will expand the existing inventory. Currently, the largest project underway is in the North Hills/Panorama City submarket. Convex Enterprises is the developer of the 59-unit community that is slated to deliver in the first half of 2023. At 8802 Van Nuys Blvd., there is a 24-unit development that will also be completed in the first half of 2023.

Studio City/North Hollywood has been one of the hotspots for apartment development in L.A. County, with 5,200 units delivered during the past ten years. Much of the new supply during this time, particularly communities with 50-plus units, was in North Hollywood around the LA Metro North Hollywood red line stop.