LOS ANGELES — Melissa Delgado and the rest of the team at Cityview are closely monitoring the Los Angeles multifamily market as economic uncertainty looms.
Cityview, a Los Angeles-based real estate developer, plans to open three workforce housing projects next year across LA, but it does so amid a possible recession.
"We're certainly monitoring our markets very closely to see any shifts in demand," said Delgado, vice president of asset management at Cityview. "I think there's going to be an impact. How that impact folds out is really going to [depend on] how this recession [plays] out, so we'll have to see. There could be things like more couplings happening, which could lead to less demand."
Cityview is an owner, operator and developer with a portfolio of more than 6,000 multifamily units on the West Coast and $3 billion in assets under management.
The company has three multifamily projects in Los Angeles currently under construction:
- Jasper is a 296-unit multifamily project at 2528 S. Grand Ave., adjacent to the University of Southern California, that is slated for completion in the first quarter of next year
- The second is 1800 Beverly, a 243-unit mixed-use project at 1800 Beverly Blvd. in Historic Filipinotown that is set for completion in late 2023
- The third is Liv on Pico, a 123-unit workforce housing project at 5935 W. Pico Blvd. next to the Los Angeles Miracle Mile neighborhood
The Liv on Pico development is the most recently announced Cityview project. Delgado says the sustainable housing project will be Leadership in Energy and Environmental Design Silver certified.
Liv on Pico will consist of 123 units of studios, one bedroom and two bedrooms averaging about 700 square feet. Delgado said 10% of the units would be reserved for extremely low-income households.
The project will feature an array of amenities, including a garden courtyard, an outdoor movie theater, pet park, rooftop swimming pool, Korean BBQ station, outdoor fitness deck with a rock-climbing wall, indoor fitness center, resident lounge and coworking space.
The development broke ground in late 2020.
The expected opening of the three apartments comes as some economists and experts warn of a possible recession in 2023.
Historically, the multifamily industry has been able to weather the impacts of a recession.
A white paper by Moody's economists found the multifamily sector performed marginally well during economic recessions in the 1980s, 1990s and 2000s.
While multifamily construction slowed, demand — and rent prices — remained stable. Moody's economists expect that to happen again this time around.
"While many single-family markets will likely see small to moderate prices decline in this situation, multifamily's positive performance should hold up relatively longer, as in previous downturns," Moody's authors noted. "Overall, in a mild recessionary environment, we would expect only a moderate vacancy rate increase and rent growth to simply decelerate. A slight and short-lived dip into negative territory toward the end of the recession is possible, but a free fall is highly unlikely."
Delgado said people need housing, but there are concerns if a recession hits.
"I think there's going to be strong factors that play into the demand for multifamily," she said. "There may be some impacts depending on how deep this recession goes and whether or not there are impacts on job losses, which could lead to different household formations."
Still, Delgado added it's essential for these multifamily projects to come online regardless of the economic landscape. Housing in Los Angeles, especially workforce and affordable housing, has been scarce.
"There's been a housing shortage in Los Angeles and Southern California," she said. "We believe this will provide new additional housing in an area that is much needed."