Trends to Watch: LA Construction 2017

You can learn a lot by analyzing four years of building permit data.

For starters, Single Family Residential tops Multifamily Residential and Commercial properties in terms of sheer project numbers. Stepping back from the data, however, several important trends are revealed.

1) The last 18 months have set new levels for the floor of construction activity.

In the chart of Single Family Residential construction activity (above), Los Angeles crossed a threshold of about 5000 permits per month in April 2015 and hasn't fallen significantly below that level since. There are similar high-water marks in Multifamily and Commercial construction activity.

2) Los Angeles is becoming a year-around town.

Construction can be a seasonal industry. In the chart of multi-family construction activity (above, the steepest valleys occur in the November, December, and January months. Yet, the most recent seasonal downturn is not as pronounced as in years past.

A look at commercial activity (above), confirms both trends -- a rise in the floor of activity and more sustained year-around activity.

It may be too early to call the last 18 months our 'new normal'. Development cycles have come and gone after all. The last dip hurt and left nearly half of our construction workforce unemployed and without alternative opportunities.

That caution aside, even with a large volume of new residential units in the pipeline, it will take many consecutive years of sustained production to meet affordable housing needs. In other words, the old ceiling may very well be the new floor.



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