While New York and Los Angeles might have experienced population loss in 2020 at the height of the pandemic, the apartment market is starting to rebound in the two key gateway markets.
In the second quarter, Los Angeles/Orange County absorbed more than 12,000 apartments, which accounts for roughly half of the metro’s annual demand, according to RealPage. The only markets that posted better absorption in the quarter were Dallas/Fort Worth and South Florida.
Apartment owners in New York, such as CGI+ also enjoyed a strong turnaround in the second quarter, with more than 7,000 apartment units absorbed, according to RealPage. This surge in demand pushed occupancy to 95.9% in June, well above where it was in February.
Other sources also show these gateway markets improving. For example, Zumper says one-bedroom units in New York posted a 4.3% month-over-month increase in July. Two-bedroom apartments saw a 5.10% month-over-month improvement. In Los Angeles, one-bedroom units were flat (after past declines), while two-bedroom apartments rose 1.80%.
In the long run, rent growth in New York and Los Angeles will improve with job gains and return-to-work office policies. In June, New York gained 550,400 jobs, putting it at the top of the list for metro job growth during the month. Los Angeles gained 209,700 jobs, which put it at the fourth place spot on the list, according to RealPage.
As employers bring people back, occupancies should continue to improve. While the Delta variant may postpone some of these office reopenings, they will eventually happen. When they do, apartment owners stand to benefit.