Apartment Rents in L.A. Suburbs Best the Urban Core

In Los Angeles, the suburbs are outperforming urban markets. Research from Apartment List shows Los Angeles rents fell 6.1% this year, while suburban rents only declined 1.4%. In some suburban markets, like West Covina and Santa Clarita, rents actually increased this year.

“The COVID-19 pandemic has altered city life in a couple of important ways that are shifting demand away from the downtown areas and toward the suburbs,” Chris Salviati, the housing economist at Apartment List, tells GlobeSt.com. “Most workers who are able to do their jobs remotely are still doing so. Many will continue to do so well into 2021, and there are signs that a broader embrace of remote work will even outlast the pandemic. Those who are working remotely no longer benefit from being close to the office, and at the same time, having a dedicated workspace at home has become more important than ever.”

The pandemic has upset the standard priorities for many renters, weighing space above the social amenities prominent in urban markets. “Many of the things that make city life so vibrant, like bars, restaurants, museums, are currently closed or operating in some limited capacity. Compared to the downtown areas, the suburbs tend to offer more space at a lower price, and the pandemic has shifted preferences such that more renters are finding the suburbs attractive right now,” adds Salviati.

Los Angeles isn’t the only city seeing a similar trend. Sprawling secondary market nationwide are getting a pandemic push with rising rents as the result of inward migration, largely from urban core markets. “Our data also shows rents heating up in a number of mid-sized markets,” says Salviati. “Phoenix and Las Vegas are good examples of this trend, and Boise, ID, has actually seen the fastest rent growth in the nation in recent months. I would say that the same factors mentioned above are driving this trend as well. Without the need to be close to the office, some workers are taking advantage of the newfound flexibility to try out life in a new city, particularly in places that offer a more affordable cost of living.”

Whether this trend is temporary or a long-term effect of the pandemic is yet to be seen, but remote work will play a significant role in determining where and how people want to live. “Some major companies, especially those in the tech space, have already announced that they plan for widespread remote work to remain the norm even after the pandemic, but at the same time, others have expressed a desire to get back to the office,” says Salviati. “At the same time, there are many reasons why folks love living in cities, and once city life regains its vibrancy, I suspect that the allure of cities will still be there.”

Even renters aren’t sure where they will land. Apartment List found that tenants are signing more short-term leases. “We also found in a newly released report, that a greater share of renters moving now are looking for short-term leases of six months or less, suggesting that a greater than normal share of moves happening during the pandemic will be temporary,” says Salviati.

In the short-term, developers are facing the biggest challenges adjusting to the sudden shift in demand. “New construction in the urban core, which tends to target the high end of the market, is probably the segment seeing the softest demand right now. I expect that any such projects that are delivered over the next 12 months will face some difficulty leasing up, and may need to offer discounted rents or other concessions,” adds Salviati. “In the medium-term, however, I expect that demand for the urban core will bounce back.”