Alexandria Hoevel, vice president and multifamily studio leader at Corgan
Although fundamentals remain solid, activity in Los Angeles’ multifamily market is still in a cooling trend.
Vacancy rates are trending upward, rising from 5% in the first quarter to 5.2% in Q2, and rent growth trails behind national averages. New apartment construction has fallen by 30% since 2022, and affordability struggles continue to plague the market, with 59% of the city’s renters classified as rent-burdened.
It isn’t all doom and gloom, however.
Los Angeles is a national leader in residential conversion projects, a process in which owners, developers and architects strategically reimagine obsolete commercial spaces as residential units. This is a trend that is rapidly gaining steam, especially with efforts to solve the city’s housing shortage of 456,000 units.
“Adaptive reuse in LA is still viable, and we have seen a lot of interest,” said Alexandria Hoevel, vice president and multifamily studio leader at architecture firm Corgan. “This is one of the warmer areas of the local multifamily market, especially if the developer already owns the asset and is looking to convert. But it’s important to note these projects can be cost-prohibitive if the building is older and requires seismic retrofitting or accessibility upgrades.”
She added that Corgan has noticed that it is a great time to buy existing multifamily assets, with some of its current projects being full community revisioning and revitalization ventures for older communities.
“Any chance we have to upgrade building environments and existing communities without significant demo and reuse and bring higher value to those assets is a win,” she said. “There have been a few recent luxury market acquisitions of larger communities within the Los Angeles multifamily market that may be signaling to a warming trend.”
Hoevel will speak at Bisnow’s Multifamily Annual Conference West in Los Angeles, which is scheduled for Nov. 12 and 13.
Bisnow spoke with Hoevel to learn more about trends shaping the LA multifamily market, amenities redefining the residential experience and the major challenges impacting the sector as it gets ready to head into 2026.
The State Of Multifamily In Southern California
Hoevel said the SoCal multifamily market has been slow for a few years. However, there are a handful of submarkets in the region that are bright spots.
“We’re seeing a lot of interest and movement in communities that are further inland and farther south or north of the LA metro, including cities in Orange County, the Inland Empire, San Diego and Ventura County,” she said. “In LA County, there’s been a lot of activity in Santa Monica and Culver City, but within Los Angeles city limits, it seems the only housing projects maybe moving forward are affordable. This slowdown has been concerning.”
She said that Corgan is frequently asked to look at previously entitled projects to help determine how to adjust them to be financially viable in today’s market.
“Many of these projects were originally approved as luxury multifamily buildings aimed at higher-end or market-rate tenants,” she said. “But now, more developers are looking for affordable housing incentives and are also experimenting with mixing asset classes. Because of that shift, many of these multifamily projects in limbo may need to go back through the approval process to become viable or look towards affordable housing incentives to streamline the approval process.”
Design And Amenity Trends Shaping Tenant Expectations
The rise of remote work since the pandemic has continued to shape amenity trends in multifamily developments. Residents are still spending more time at home, even though most people are hybrid or in-office. There is still a huge need for spaces for residents to work either within their units, separate from their main living and sleeping spaces, or within their communities, she said.
“We’re noticing that folks are also renting for longer,” Hoevel said. “There are more renters with higher incomes that are not buying a home in the current market because renting has become more economical. As property values and interest rates remain high, amenities still play key roles in attracting and retaining renters, even in LA’s tough rental market. For the right amenities and conveniences, these renters will pay more.”
Corgan produced a document called Residency Reshaped in 2024 via its in-house research group, Hugo, that studied what residents want in six major Sun Belt markets. The goal was to find out how design and amenities were attracting them to or motivating them to stay in their communities.
“Some of the biggest drivers the research uncovered was that residents want walkable neighborhoods in established communities,” Hoevel said. “We’re seeing community amenities like mass transit options and nightlife and entertainment close by are still big draws. Within residential communities themselves, residents value perks like roomier units, secure parking, larger gym spaces and resortlike pool and lounge amenities. Within the SoCal multifamily market-rate and luxury markets, we’re noticing a lot of those metrics are relevant.”
Major Challenges Facing SoCal Multifamily
In addition to higher-for-longer interest rates, Hoevel said that insurance rates are skyrocketing across SoCal. This has become a serious roadblock for new and existing properties.
“Owners are not able to insure some properties anymore due to high fire risk or coastal erosion,” she said. “Interest rates also remain high, and when you mix that with depressed rent rates throughout the city, it creates a challenge. In addition, Los Angeles still has that hangover from the Covid-era eviction freezes.”
There are also increased financial burdens created with the implementation of Measure ULA, a sales tax of 4% on all property sales over $5M and 6.6% on those over $10M within LA city limits. Meant to raise funds for affordable housing and homelessness prevention initiatives, it has contributed to reductions in new commercial and multifamily project permit starts, leading some developers to stop looking inside LA city limits for new opportunities, Hoevel said.
“UCLA found an 18% decline annually since Measure ULA was put into action,” she said. “Depending on who you ask or what metrics are being considered, the loss is probably much greater than that.”
‘Build Up, Not Out’
Corgan believes increasing density is the way to collectively tackle the housing crisis, urban sprawl and environmental concerns in Los Angeles and Southern California, Hoevel said.
“We really need to build where we need housing — close to jobs and accessible to mass transit,” she said. “I can’t emphasize enough the importance of Los Angeles’ Citywide Housing Incentive Program Ordinance, or CHIP, which has replaced the Transit-Oriented Communities tiered incentives, expanding density bonuses and incentives to more neighborhoods throughout the city, including those that were previously excluded under the old program. I’m excited about SB 79 passing. This will allow us to build more transit-oriented developments near mass transit stops statewide.”
Hoevel said Corgan wants to promote responsible growth in areas where it makes sense to help solve the city’s housing deficit of about 500,000 units.
“As architects and developers, it’s so important that we contribute to adding density responsibly, in a way that respects and enhances the existing community fabric,” she said.
This article was produced in collaboration between Corgan and Studio B. Bisnow news staff was not involved in the production of this content.
Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.