The sheer scope of devastation wrought by the still-not-extinguished fires in the greater Los Angeles area are hard to fathom. While entire neighborhoods of residential homes have literally become scorched earth, and local brokerage leaders have vowed to rebuild, CoStar Group on January 24 released a report detailing the collateral destruction of commercial and multifamily properties.
Key overall takeaways
- Approximately 1,472 commercial real estate properties are believed to fall within the incident and evacuation areas, comprising more than 28 million square feet at an estimated value of $9.8 billion.
- Retail and multifamily properties have the largest exposures, with 512 and 480 buildings, respectively.
- The Palisades fire included 786 commercial properties with a higher percentage of multifamily properties within the incident perimeter than the Eaton fire. Estimated property values total $7.7 billion.
- The Eaton fire included 704 commercial properties and an estimated $2.1 billion in commercial property value.
The owners of the Aon Center, led by investment firm Carolwood, donated office space at the 62-story downtown Los Angeles tower to businesses displaced by the fires. The building is roughly 73% occupied, a figure that has climbed slightly since the landlord took over the building at the end of 2023. The 27% vacancy rate comes as downtown Los Angeles struggles with the lack of office demand that has persisted across a number of major cities around the country as we face higher interest rates combined with hybrid work practices.
The majority of impacted multifamily properties are small and aging, with 75% of the 434 apartment properties in the fire zones having fewer than 15 units. The average property age is 74 years, and most lack modern amenities like clubhouses, fitness centers and on-site parking.
Many small property owners may lack the capital or experience to redevelop, increasing the risk of permanent housing loss. Some parcels may be redeveloped into single-family homes, further tightening the multifamily supply.
Limited new construction
Only 21,000 units are currently under construction, with just 6,000 forecasted for delivery in 2025, according to CoStar. With over 7,300 multifamily units impacted by the fires, replacing lost housing could take years, as LA’s lengthy approval process makes rapid redevelopment unlikely.
The fires have displaced an estimated 22,300 households (15,000 single-family homes plus 7,300 multifamily units), the CoStar analysis found. LA has averaged 8,200 units of demand annually over the past decade, but demand in 2025 could spike to 30,500 units—matching the record set in 2021.
With only 6,000 new units projected for 2025, vacancy rates could fall below 4%, driving significant rent pressure, according to CoStar.
Governor Newsom meets with Trump
On January 24, California Governor Gavin Newsom met with President Donald Trump on the tarmac at Los Angeles International Airport. The president was in LA to survey areas destroyed by firestorms earlier this month.
Next to Air Force One, Newsom emphasized areas of collaboration and coordination with the federal government. Governor Newsom urged President Trump to support Los Angeles recovery and rebuilding efforts.
“We welcome President Trump to California with an open hand,” he said. “Just as President Trump supported California during the pandemic, we will work together again for firestorm survivors and communities across Los Angeles who deserve all the help they can get from federal, state and local governments.
“While we work on recovery, we’re also deploying crews across the region to protect against potential mudslides from the rains expected this weekend. We’re not out of the woods, but the people of Los Angeles should know we’re not leaving your side.”
At its height, 16,000-plus personnel were battling blazes across Southern California, including firefighters from CAL FIRE, the California Department of Corrections and Rehabilitation, and local government. Response efforts have included more than 2,000 pieces of firefighting equipment—1,490-plus engines, 80-plus aircraft, 200-plus dozers and 210-plus water tenders to aid in putting out the fires.
According to a release on his website, Newsom has issued a number of executive orders to help aid in rebuilding and recovery, including:
- Providing tax relief to those impacted by the fires, California postponed the individual tax filing deadline for Los Angeles County taxpayers. Additionally, the state extended the sales and use tax filing deadline for Los Angeles County taxpayers.
- Streamlining the rebuilding of homes and businesses that were destroyed—suspending permitting and review requirements under the California Environmental Quality Act (CEQA) and the California Coastal Act.
- Fast-tracking temporary housing, helping provide necessary shelter for those immediately impacted by the firestorms and making it easier to streamline construction of accessory dwelling units, allow for more temporary trailers and other housing, and suspend fees for mobile home parks.
- Mobilizing debris removal and cleanup by directing fast action on debris removal work and mitigating the potential for mudslides and flooding in areas burned and allowing expert federal hazmat crews to start cleaning up properties in order to allow people to get back to their properties safely.
- Safeguarding survivors from price gouging by expanding restrictions to protect survivors from illegal price hikes on rent, hotel and motel costs, and building materials or construction.
- Getting kids back in the classroom to quickly assist displaced students in the Los Angeles area and bolster schools affected by the firestorms.
- Protecting firestorm survivors from predatory land speculators making aggressive and unsolicited cash offers to purchase survivors’ property.
