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Multifamily deal activity rises in Los Angeles metro despite weak supply
Only 8,500 multifamily units are expected to be added in the Los Angeles metro this year, while multifamily deal flow in the year ending in March improved 25%.
Los Angeles’ multifamily development market is struggling as developers face rising construction and labor costs, regulatory challenges, a city transfer tax under Measure ULA, and persistent financing issues, Commercial Observer reports.
With housing supply limited, the outlet points to expectations that only 8,500 units will be added in the Los Angeles metro area this year, while rents are projected to rise about 1.0 percent, a setup that the report frames as a hurdle for new multifamily investment.
Still, Commercial Observer says the picture in transactions is improving in parts of the market. CBRE data cited by the outlet show quarterly multifamily sales by dollar amount peaked in mid-2025 and then fell 50 percent in the first quarter of 2026 versus the fourth quarter of 2025, but sales volume and the number of units sold have increased in certain categories.
According to a Marcus & Millichap report cited in the piece, multifamily deal flow in the L.A. metro improved 25 percent in the year ending in March, with growth in Class C properties selling for $1 million to $5 million. The outlet also says private investors closed 66 percent of multifamily sales volume, and that a separate NAI Capital research brief found multifamily sales volume spiked more than 25 percent in the second quarter, with units sold climbing 39 percent, particularly for properties above $10 million.