Equity Analyst: Orange County, Boston, LA Top Multifamily

WASHINGTON, DC-Orange County, Boston and Los Angeles are the top multifamily markets while investors should keep an eye on Washington, DC, Austin and San Francisco, according to Paul Penney, senior equity analyst for Robertson Stephens. He made the comments during a conference call sponsored by the National Association of Real Estate Equity Trusts aimed at analyzing the multifamily sector.

The nationwide occupancy rate is 96.4%, according to Penney, who said he believes the sector will continue to boast healthy returns as long as the supply-demand ratio remains balanced. The country has 34 million renter households, one-third of which rent single-family homes, another 20% that rent apartments in buildings with 2 to 4 units, and the rest–which include some 18 million renters–contain more than 5 units in what he called the “industrial” portion of the sector. His analysis targeted that sector.

Orange County, Boston and Los Angeles were his top picks for the highest performing markets. Orange County has a 98.4% occupancy rate, with 12% average rent increases last year and projected increases this year of 8.5% to 10%. Some 3,700 new apartments are expected in 2001. Boston boasts a 98.9% occupancy rate, with 21% rent increases last year and a projected increase this year of 9.5% to 10%. The market is sorely in need of more units, with only 3,200 completions slated for this year. In Los Angeles, which has a 97.1% occupancy rate, rents went up 8.5% last year and are expected to grow 6.5 to 8.5% this year, with 6,930 new units slated to hit the market.