Greater Inglewood has historicallybeen a depressed part Los Angeles, with rents and sale prices ranking near thebottom of the metro. Vacancies are near historical lows, but the area’s sub-parrents and listless economy traditionally kept developers away. However, theimpending arrival of an NFL stadium in Inglewood is expected to reshape thesouthern portion of the submarket.
Construction and operation of the stadiumshould generate thousands of new jobs, and Metro officials are alreadydiscussing options for a new rail line to the area. Speculative buying aroundthe proposed stadium site had been ongoing for several years, and GreaterInglewood should continue to feel the positive effects of the new stadiumcomplex for years to come.Greater Inglewood Vacancy OverviewGreater Inglewood vacancies haveremained low throughout the post-recession cycle. Because the submarket hasmissed out on LA’s recent building boom, there have been no supply-side issuesto water down the pent-up demand growth.
Net absorption was strong relative tothe submarket’s historical performance for most of the recovery, but the lackof available units is now weighing on absorption gains.Greater Inglewood faces both economicand demographic barriers to development. Even in a slow-growth area like thisone, pent-up household formation during the recession unleashed a boom inapartment demand starting in 2010 as the national economy turned the corner.Despite that, Greater Inglewood’s population grew only about 2% from 2010–15,half the metro rate.
In other submarkets, the demand boom was sustained byemployment gains, leading to healthy absorption, especially at the high end ofthe quality spectrum. Greater Inglewood also posted decent job growth, but flatincome growth over the past few years suggests that the jobs are being createdat the lower end of the pay scale, insufficient to boost demand across theboard.There are pending infrastructureenhancements that may improve both employment and apartment demand. The arrivalof an 80,000-seat football stadium at the former Hollywood Park racetrack couldcreate 4,000 jobs, according to the City of Inglewood, and will jump-startdevelopment in the area. The LA Clippers also recently entered into anagreement with the city to explore development of a new arena there, possiblypaving the way for the Clippers’ departure from Downtown LA. In the northernportion of the submarket, at Exposition Park near USC, George Lucas is buildinga Museum of Narrative Art that could help improve the social and cultural imageof the area.
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Transportation improvements are also in the works with the ongoingconstruction of the LA Metro’s Crenshaw/LAX Transit Project, which will addeight light-rail stations within the submarket along Crenshaw Boulevard andFlorence Avenue.Greater Inglewood Rent TrendsThe submarket’s rent levels, much likeits income levels, are well below the metrowide average. This disparityexplains to a large degree why developers haven’t come to Inglewood yet in thiscycle, despite historically low vacancies.
On the bright side, rents continueto grow at a faster pace than the metro as a whole, with gains of about 4.9%over the past four quarters. Updated: Aug 31, 2017Greater Inglewood Supply TrendsGreater Inglewood encompasses roughly38,000 units, making it LA’s sixth-largest apartment submarket. Its inventoryis very low quality, with 90% of units in the 1 & 2 Star quality slice.This is the heaviest concentration of 1 & 2 Star properties of any LAsubmarket. There are only a handful of 4 & 5 Star developments, mostlyclustered around the University of Southern California in the northeast part ofthe submarket. Greater Inglewood’s stock is also geared toward families ormultiple student renters, with 40% of inventory in two- and three-bedroomunits.
New construction is limited to thenorthern part of the submarket near USC for the time being. This submarket hashistorically been overlooked by developers because of its unappealingdemographics and rent gains. Low vacancies, healthy rent growth, the light railextension, and the arrival of an NFL stadium should all help boost developmentgoing forward though.The LA planning commission recently approved a proposalfor a large multi-block development just south of the 10 Freeway, where GreaterInglewood borders Downtown and Southeast LA. Known as “The Reef,” theproject would add more than one million SF of new construction, including morethan 1,000 residential units, a hotel, a grocery store, and several publicgathering areas. If the project moves forward successfully, it could spurfurther new development in this previously overlooked portion of the metro.Another mega-project was recently approved in the Northwest corner of thesubmarket next to the Expo Line’s La Cienega/Jefferson metro stop.
Currentlyknown as the Cumulus Transit Oriented Project, Carmel Partners plans for a1,200+ unit development in multiple buildings, including a 30 story high-risetower. The pending arrival of the LA RamsStadium is already impacting the residential market. In May 2017, HarridgeDevelopment Group acquired an 18 acre plot a few blocks north of the stadiumsite, with plans to build a gated community with 228 detached condos. Harridgepaid a little over $33 million for the site, which had previously traded in2013 for $20 million. Greater Inglewood Investment TrendsGreater Inglewood’s low unit pricingis reflective of its subpar rents. A median price of around $165,000/unit as of17Q3 came in well below the metrowide average, although prices here have grownby nearly 75% since 2013. Deal volume has subsided noticeably this year, inpart due to the absence of larger portfolio trades of the type that drovenear-record volume in 2016.
As of August 2017, no deals had been recorded thisyear for greater than $10 million. The largest recent trade was VistaInvestment Group’s July 2016 acquisition of the 276-unit Woodlake ManorApartments for $44 million, or about $160,000/unit. The property was 95% leasedat the time of sale, with asking rents around $1.
75/SF, and traded at a 5.25%cap rate.
