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|Skyrocketing Rents Take Brief Break in Santa Monica, Survey Finds|
By Niki Cervantes
February 23, 2017 -- After years of the steep hikes that produced today’s sky-high rents, Santa Monica tenants are getting a tiny and very brief break, a new survey of rents in metropolitan Los Angeles shows.
But they shouldn't get their hopes up.
Average rent in Santa Monica dropped about 2.4 percent in December, compared to December 2015, according to Yardi Matrix, a Santa Barbara-based company that tracks rents throughout Greater Los Angeles, as well as nationally.
The recent study by Apartments Rents also found a similar dip in Santa Monica rental rates, abeit smaller ("Santa Monica Rent Increases Slow but Prices Still Among Highest in Metro L.A.," February 1, 2017).
The slightly lower rents appear to reflect a faux slowdown that won’t last long, according to Yardi Matrix.
The driving factor is one high-rise building -- the Champagne Towers, an analyst for Yardi Matrix said.
The famed 16-story apartment complex at 1221 Ocean Avenue -- which has been home to celebrities from Britney Spears to Larry David -- closed for remodeling in 2015.
Its temporary exit was a shock to the rental market, said Balazs Szekely, an analyst and writer at RENTCafé, a blog for Yardi Matrix.
Rents range from $4,000 to $15,000 a month for the estimated 120 units in Champagne Towers, which was built in 1968 by a development firm controlled by the late bandleader Lawrence Welk.
“All of its units being top-notch ultra-luxury apartments, this meant the average rent dropped tens of dollars, practically overnight,” Szekely said.
“But don’t worry, as soon as the building comes back online, everything goes back to normal. In fact, we’ll most likely see a huge spike, but at least we’ll know the cause and won’t freak out.”
Champagne Towers, which opened in 1971, also completed a $90 million retrofit/remodeling in 1999 after being badly damaged in the 1994 Northridge earthquake.
Champagne Towers or no, Santa Monica is nonetheless the most expensive city in which to rent in metro L.A., Szekely said. Average rent is reaching a “startling” $3,256 a month, he said.
Yardi Matrix’s report is one of a growing number of studies released by websites that speialize in rentals, and while their findings tend to agree on general trends, the more specific numbers often vary ("Is Santa Monica the Nation's Most Expensive City for Renting an Apartment?" January 6, 2017).
Yardi Matrix’s data showed average rent in L.A. jumped from just under $1,800 in January 2014 to $2,173 in December 2016, but seems to have stabilized in the last few months.
Rents also rose in several significant cities in metro L.A. as well, with residential rents increasing by as much as 19.7 percent year-to-year, the survey found.
Cities such as Inglewood, Alhambra, Hacienda Heights, Hawthorne and Gardena posted “staggering” (given the past) rent hikes of 10 percent or more in the same year-to-year period.
Long Beach rents rose so much, Szekely said, that tenants paid the equivalent of 13 months in rent in 2016.
But the blue-collar city of Inglewood “was the biggest shocker of them all", he said. The rent hikes there were just shy of 20 percent, Szekely said.
The culprit is most likely the new $2.6-billion sports stadium for the Rams and Chargers, he said. The stadium will be surrounded by sprawling development that includes a performance venue, hotel, hundreds of thousands of square feet for retail and offices, homes and a lake with waterfalls.
High-paying jobs are already arriving and more are expected to follow, the report said.
“The vacancy rate is already quite low, and the fact that no new units came online last year means even less bargaining power for renters,” Szekely said.
“It’s no coincidence that rents are skyrocketing in other inland cities of the South Bay too, such as Hawthorne and Gardena, which experienced increases of 11.7 percent and 10.8 percent, respectively,” he said.
Yardi Systems, Inc., which produces the survey, is a Santa Barbara software company focused on commercial real estate industry applications. It started in 2013.
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