Top California Markets for Multifamily Construction Activity

Whereas metros akin to Dallas, Austin and Phoenix seeing rental market efficiency improve  so nicely for the reason that onset of the well being disaster, most California markets are nonetheless in a housing disaster. California recovers at a gradual tempo, with builders struggling to fulfill the demand for housing, particularly within the reasonably priced phase.

Within the checklist beneath we’re highlighting the highest multifamily markets in California utilizing Yardi Matrix knowledge as of the tip of October 2022. Mixed, 94,970 items have been below building in California in 2022, accounting for just a little over 9 p.c of the items being constructed throughout the nation.

1. Los Angeles

The Los Angeles multifamily market had 33,114 items below building, a 35-percent share of California’s items below building as of October 2022. With 6,487 items already delivered yr to this point, accounting for 30 p.c of statewide deliveries, the metro stays the strongest market in California. In 2022, building began on 8,852 items, down by one third from final yr’s total numbers, making it largely unlikely for 2022 to maintain up with with 2021 figures.

This yr’s amplest building is Carmel Companions’ 910-unit Vox. With 910 items, the partially reasonably priced group was delivered on the finish of September. Its design focuses on integrating music, sound and motion all through, Andy Sands, Carmel Companions’ managing associate mentioned in an interview with Multi-Housing Information.

2. San Francisco

With 5,740 items delivered as of October 2022, the San Francisco metro delivered roughly half the quantity of items it did in 2021 total, with building lagging final yr’s tempo within the metro. Nonetheless, San Francisco’s strong tech sector continues to contribute to the job market, with well-paying positions throughout the metro, serving to it rank extremely on our checklist. Furthermore, on the subject of new tasks, in 2022 building began on 6,635 items by October, whereas in 2021 the quantity was not that a lot greater, at 7,363 items.

The 599-unit Station Park Inexperienced in San Mateo, Calif., is the metro’s largest life-style group to have been accomplished this yr. Owned and managed by Essex Property Belief, the group additionally has 49 reasonably priced items.

3. Bay Space–South Bay

Despite the fact that the Bay Space’s multifamily market was one of many hardest hit by the pandemic-induced downturn of 2020, its building sector has not too long ago bounced again and is making strides. Moreover, this yr in April, the unemployment charge within the metro marked the bottom charge in additional than a decade, at 2.2 p.c, in keeping with the Bureau of Labor Statistics.

By October, building had began on a complete of three,776 items all through 13 properties in metro San Jose in 2022, whereas in 2021, there have been 14 properties and a few 2,600 items. There have been 8,908 items below building within the South Bay space, with roughly 42 p.c of them beginning building this yr.

4. Orange County

Orange County confirmed exceptional resilience through the fallout from the pandemic after which started a gentle restoration, particularly within the second half of final yr. This, coupled with the metro’s strong fundamentals, gave the market a robust begin in 2022, with lease development, financial enlargement and occupancy all outperforming nationwide ranges.

Nonetheless, the development pipeline consisted of solely 625 items underway, whereas in 2021 building began on 3,028 items. A complete of 1,497 items have been delivered this yr thus far, out of which 1,325 goal the Life-style phase. One other 1,427 reasonably priced items are additionally presently below building.

5. San Diego

As per Yardi Matrix knowledge, the San Diego market has one of many largest common occupancy charges in stabilized belongings within the state.  Multifamily report in June, occupancy within the metro had then elevated 90 foundation factors over 12 months, whereas year-over-year lease development clocked in at 20.8 p.c, thus outperforming the nationwide common.

After the three,417 items delivered in 2021, we now have 2,862 multifamily items delivered by the tip of October. A complete of 700 of those items are Renter-by-Necessity, whereas the opposite 2,162 goal the Life-style phase. An extra 1,035 fully-affordable items are below building, whereas 646 items have been delivered in totally reasonably priced communities this yr.

6. Sacramento

With a robust inhabitants development trajectory, Sacramento’s job market continues to be rebounding, displaying a charge of development of 5 p.c, with the federal government, training, leisure and hospitality sectors having the biggest shares of employment, increasing by 30 foundation factors over the nationwide common, in keeping with Yardi Matrix knowledge.

The town’s building pipeline stays gradual, with solely 7,104 items below building by October 2022 and 1,588 items delivered this yr, lower than half of final yr’s 2,120 delivered items. Development began on 1,309 multifamily items within the metro this yr.

7. Inland Empire

The market’s proximity to Los Angeles and Lengthy Seaside ports made logistics the world’s major financial driver. Being that it’s Southern California’s most reasonably priced market, increasingly more folks transfer into the metro, with nearly 350,000 residents added over the previous decade.

Housing demand is robust, however growth is usually restricted within the metro. Solely three properties comprising a complete of 404 items have been delivered by the tip of October. Development has began this yr on one other 1,309 items, lower than half of final yr’s 2,833 begins.

8. Central Valley

With no MSA to drive multifamily demand and a slighter financial system in comparison with most California markets on the checklist, Central Valley nonetheless had 1,071 items delivered this yr, in comparison with final yr’s 2,120. One other 3,851 items are below building, with 1,610 of them being began on this yr. A complete of 263 reasonably priced items have been delivered within the Central Valley market from the beginning of the yr till October.

9. Central Coast

The Central Coast had the bottom rental provide pipeline within the state of California. Solely two properties comprising a complete of 254 items have been delivered year-to-date. Development has begun in 2022 on 10 communities comprising 939 items. No reasonably priced items have been delivered out there this yr, however 985 reasonably priced items have been underway.