LOS ANGELES-The 2012 Casden Multifamily Forecast from the University of Southern California Lusk Center for Real Estate reveals a strong performance for the local multifamily market in 2011 and predicts more growth over the next two years. The annual checkup, which was presented Thursday morning, analyzes four apartment markets—Los Angeles, Orange, and San Diego counties and the Inland Empire—showed across-the-board improvements in rents and vacancy rates in 2011.
USC Casden Forecast author Tracey Seslen emphasized that rent growth in 39 of the region’s 40 submarkets is a sharp contrast from two years ago when only three submarkets saw increased rents, as well as last year when 26 markets showed flat or growing rents.
“A sharp drop in new construction, the dwindling supply of shadow-market units, and improvements in the macroeconomy have strengthened fundamentals on both the supply and demand side,” Seslen said. “This is boosting asking rents, reducing or eliminating concessions, and filling units.”
During the next year, rents will continue to rise at varying rates in each market, says the report. In 2013, the rate of growth is expected to slow as construction returns to normal levels. The future health of the multifamily market will also continue to be determined by employment, home prices, shadow-market inventory and oil prices.
Los Angeles County, which had a 6.2% increase in average rents and 22,340 net move-ins, was the strongest performer. While all four markets again saw positive net absorption in 2011, only Los Angeles and San Diego counties saw an increased rate of absorption, says the report. While Orange County saw the largest increase in same-store rents at 4.9%, it also had the smallest increase in average rents of 3.2%.
“All four metro markets have returned to vacancy rates that are very close to their natural levels, which is the level at which inflation-adjusted rents remain constant,” Seslen added.
Some highlights from each market include:
*Los Angeles Forecast
The forecast predicts average rents will increase 7.9% to $2 per square foot in 2012 with total growth of 9.6% to $2.04 per square foot by the end of 2013. Vacancies are expected to rise slightly in 2012 with increases continuing in 2013 as rent growth slows.
*Orange County Forecast
The forecast predicts average rents will increase about 3.3% to $1.78 per square foot in 2012 with total growth of 5.1% to $1.83 per square foot by the end of 2013. Vacancy is expected to remain relatively stable during this time.
*Inland Empire Forecast
The forecast predicts an approximate 3% increase in average rents to $1.26 per square foot in 2012 and a total increase of 3.8% to $1.27 per square foot by the end of 2013. Vacancy is expected to fall this year, before rising in 2013.
*San Diego County Forecast
The forecast predicts that average rents will increase 3.4% to $1.64 per square foot in 2012 and 5.2% total by the end of 2013, to $1.67 per square foot. As in Los Angeles, vacancies are expected to rise slightly in 2012 with increases continuing in 2013 as rent growth slows.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
