San Fernando Valley Multifamily: A 2025 Reality Check for Owners and Investors

On paper, the numbers still look solid. In real life, leasing feels a little slower, concessions are creeping in at the margins, and buyers are underwriting more carefully. This article is meant to cut through the noise and give a clear, Valley‑specific snapshot from both recent market reports and what Topanga is seeing day to day as local owners and operators.

The high-level story: not a crash, not a boom

The Q2 2025 San Fernando Valley Multifamily Market Report from Matthews Real Estate Investment Services shows a market that has cooled from the peak but remains fundamentally healthy. The report highlights approximately 1.3% rent growth for the quarter, about $586 million in multifamily sales volume, a vacancy rate near 3.85%, average asking rent around $1,991 per unit, and roughly 1,756 units under construction across the Valley.
 
A complementary Q3 2025 update for Central San Fernando Valley and additional analysis from research partners indicates that vacancy has drifted higher in some submarkets, particularly where new supply is delivering, while rents have flattened or softened slightly in a few pockets. Taken together, these reports point to a classic operators’ market: decent fundamentals, but no free lunch. Good buildings with competent management hold up. Weak execution gets exposed.

Construction pipeline and absorption: pressure, but not panic

Across the San Fernando Valley, the construction pipeline remains active but manageable. Q2 2025 data from Matthews shows nearly 1,800 units under construction and a few hundred units delivered year-to-date, with positive net absorption helping to keep overall vacancy in check. A separate Central San Fernando Valley snapshot notes average asking rents hovering around the low $2,000s per unit, vacancy in the mid‑5% range, and more than 900 units completed year-to-date alongside nearly 1,400 units still under construction.
 
For owners, the practical takeaway is straightforward:

• New projects are adding competition in certain pockets.
• Lease-ups need sharper execution to hit pro formas.
• Existing, well-located workforce housing is still in demand, but renters have more options and are more sensitive to price and finishes.

Submarket snapshots: Van Nuys, Sherman Oaks, and surrounding pockets

Zooming in at the submarket level, the story gets more nuanced.
 
A Q3 2025 Van Nuys multifamily report shows average asking rents around $1,834 per unit, making it one of the more affordable submarkets in the Los Angeles metro. Van Nuys also has one of the largest construction pipelines in the Valley, with more than 600 units underway, including a single 400+ unit development on Sepulveda Boulevard scheduled to deliver in 2027.
 
Meanwhile, a Q3 2025 Central San Fernando Valley report notes that vacancy has moved into the mid‑4% to mid‑6% range in areas with new supply, with Sherman Oaks above 6% vacancy and Van Nuys closer to the mid‑4% range. Rent growth has been flat to slightly negative in several pockets, while Encino still posts modest positive gains.
 
Other Los Angeles multifamily research, including countywide reports and LA‑wide vacancy summaries, reinforces this picture: the San Fernando Valley generally sits around a 4% vacancy rate, with average rents in the $1,700–$2,200 per month range depending on product and location. Some neighboring submarkets like Burbank–Glendale–Pasadena have recorded stronger annual rent growth, but the Valley remains one of the more stable, income‑oriented regions in the metro.
 
In plain English: the Valley is not falling apart. It is just not bailing anyone out for sloppy ownership.

What this environment really means for owners

If you strip away the headlines, 2025 in the Valley has come down to execution and time horizon.
 
For current owners:

• Hold vs. sell decisions are more nuanced. With cap rates around the low‑5% range and financing still not back to “easy money” territory, selling only makes sense if the asset is truly optimized or if capital needs to be redeployed.
  
• Protecting NOI is everything. A 50–100 basis point move in vacancy or concessions can erase the modest rent growth the reports are talking about.
  
• Capex has to be strategic, not cosmetic. Lobbies, laundry, parking, security, and unit basics move the needle more than trendy finishes in this kind of market.
   

For buyers and would‑be buyers:

• Underwriting has gotten more realistic. Deals are still closing, but pricing per unit and cap rates now reflect softer rent growth assumptions and higher operating friction.
• Value‑add” actually has to add value. Cosmetic upgrades alone will not justify aggressive rent premiums in a rent‑capped, higher‑expense environment.

For small and mid‑size investors:

• The Valley remains one of LA’s most compelling “real world” markets. Rents are high enough to support improvements, but not so high that a slight rent move triggers massive vacancy.
• However, the margin of error is thinner. Rising insurance, utilities, and compliance costs mean that sloppiness on the operating side gets punished faster.

How Topanga is responding on the ground

Topanga sits in a slightly unusual position: we are not just third‑party managers. We are also owners and long‑term investors in Valley communities. That perspective shapes how decisions get made for our portfolio and for clients.
 
A few ways we are adjusting in this environment:

• Leasing with a “no empty chairs” mindset. We are more aggressive about follow‑up, renewals, and timing make‑readies so that units do not sit. In a 4–5% vacancy world, speed and responsiveness directly show up in the financials.
• Being honest about rent levels. We use third‑party market reports plus our own rent rolls and lead data to set asking rents that are ambitious but realistic. Pricing a unit too high and watching it sit for 30 days is more expensive than getting it occupied at a fair number.
• Focusing on “boring but high‑ROI” improvements. Clean, well‑lit common areas, reliable building systems, functional laundry, decent parking, and secure access tend to outperform flashy but shallow upgrades. Residents will still pay for quality and predictability.
• Planning around the new rent‑cap environment. Changes to LA’s rent rules and statewide caps (covered in a companion article) are built into our renewal strategy, budgeting, and longer‑term capital plans.

What to watch heading into 2026

Looking ahead, a few indicators will matter most for San Fernando Valley multifamily owners and investors:

• How quickly the current construction pipeline delivers and leases up, especially in Van Nuys, North Hollywood/Studio City, and Woodland Hills.
• Whether vacancy stabilizes in the mid‑4% range or inches higher as new product hits the market.
• How the evolving rent‑cap framework interacts with rising expenses to shape real, on‑the‑ground NOI.
• Transaction volume and cap‑rate movement as more owners confront refinance or sale decisions.
   

Topanga’s view today: San Fernando Valley multifamily remains a fundamentally sound, income‑driven market. The next few years will favor owners and investors who treat it that way—paying close attention to operations, compliance, and resident experience—rather than assuming appreciation will do all the work.

If you would like to see how your building stacks up against these benchmarks, or want a second set of eyes on a potential acquisition in the Valley, you can request a complimentary review through our Free Property Audit program here: https://www.topangapropertymanagement.com/request-a-free-property-audit