Heavy Housing Demand Cited : Study Finds Westside Rent Among Highest
The Westside not only has the distinction of having some of the most expensive houses in the Southland, it also has some of the most expensive apartments.
A study by Grubb & Ellis Co., a national real estate firm, found that a typical two-bedroom apartment in Westwood rents for $1,500 a month; a one-bedroom unit goes for $950 a month, and a single rents for $817.
To qualify to rent such a unit, a person must have an annual salary of between $38,000 and $60,000.
“What this study suggests, is that it is becoming increasingly more difficult to find a place to live,” said John F. Carpenter, senior vice president and district manager of the firm’s West Los Angeles office. “It also shows that it takes a relatively high income to be able to afford the rents once a suitable unit is found.”
The study was done primarily for developers interested in constructing apartment buildings or investors looking to buy buildings, Carpenter said.
The study predicts that the value of existing buildings in Westwood will appreciate this year between 6% and 8%, and rise even higher in 1990, when construction of the last of the planned apartment buildings is completed.
Vacancy Rates
“The fact is that we are simply running out of land, and the prevailing slow-growth sentiment will only add fuel to the demand side of the equation,” Carpenter said.
“While this will force those wishing to live in apartments in Westwood to pay higher rents, investors and developers will find themselves in a favorable position with low vacancies and strong demand.”
The vacancy rate in Westwood is 4%, and as low as 2% in older, less expensive buildings, according to the report. The industry considers a rental market full with a 5% vacancy rate.
Craig L. Marcus, a Grubb & Ellis investment properties specialist who helped prepare the study, said vacancy rates for all of the Westside are under 5%, with a low of less than 1% in Santa Monica to a high of 4.5% to 5% in the Hollywood/Mid-Wilshire area.
Marcus said the study focused on the area bordered by Sunset Boulevard on the north, Olympic Boulevard on the south, Beverly Glen Boulevard on the east and Sepulveda Boulevard on the west.
Only buildings built since 1975 with at least 15 units were considered in the study. There are 100 such buildings, with a total of 5,152 units.
The study found that the primary source of demand for apartments in Westwood are students attending UCLA or young professionals who work in the area but can’t afford to buy a house on the Westside, yet are affluent enough to afford the higher rents. Only 11% of the apartment market in Westwood has households with children.
“The two most popular apartment types in the Westwood marketplace are either singles, which are the most affordable, or two-bedroom, two-bath units that can be shared,” Marcus said.
Current construction plans are expected to add another 800 units to the market by next year, but no new substantial apartment development is expected after that because of new building limits.
High Demand
“The demand factor for the apartment market in Westwood, and in many areas of West Los Angeles, has remained high over the past decade,” Carpenter said. “We do not see that demand slackening any time soon, but we do see supply being constricted, especially after this year’s high number of units under construction are finished in the Westwood area.”
While Westwood has the highest average rents, other Westside areas are only slightly more affordable. Marcus said a typical two-bedroom apartment in Brentwood and Beverly Hills rents for $1,450 a month. The average monthly rent drops in West Hollywood to $1,250, and to $1,150 in Hollywood.
HIGH-RENT AREA A study of Westwood apartments by Grubb & Ellis Co. found:
A typical two-bedroom apartment rents for $1,500 a month; a one-bedroom unit goes for $950 a month, and a single rents for $817.
To qualify to rent such units, a person must have an annual salary of between $38,000 and $60,000.
The vacancy rate is 4%, and as low as 2% in older, less expensive buildings. The industry considers a rental market full with a 5% vacancy rate.
