Miramontes: Availability of land in Orange County's Airport area is scarce and getting multifamily development approved and permitted is a difficult process because of the legislation enacted in 2010 limiting the amount of multifamily development allowed in the Irvine Business Complex. The Irvine Company's controlling interest in the submarket also gives them a lot of leverage, which makes it difficult for other developers to compete.

In 2018, 100% of both year-to-date and projected deliveries in Irvine will be class-A product targeting the top of the renter market. For OC as whole, 92% of 2018 year-to-date and projected deliveries will be class-A product. Irvine also has the most development activity of any OC submarket right now and accounts for 48% of the units under construction. 10.7% of the total multifamily inventory in Irvine is under construction right now. The submarket with the next most development is Anaheim, which accounts for 20.5% of the units under construction in OC. Anaheim has 5% of the total multifamily inventory under construction right now and that is the next largest percent. For the remainder of the submarkets in OC, the units under construction as a percent of total inventory is normally 1% to 3%.

GlobeSt.com: Do you expect the pipeline to grow this year?

Miramontes: No the pipeline will not deviate from what is currently under construction, planned or proposed. As mentioned earlier, 48% of the multifamily units under construction in Orange County are in Irvine. Besides what is currently in the pipeline, there is extremely limited development opportunity in the Airport Area for multifamily product.

GlobeSt.com: What does this activity say about apartment demand in OC, and the evolution of apartment demand in OC?

Miramontes: Multifamily demand in Orange County will continue to grow and the limited availability of land in areas such as Irvine will drive both office and multifamily development to look for different submarkets for development opportunities. The good news is income levels are projected to increase 3% annually in Orange County, which is positive for areas such as Irvine where rent levels are high and projected to grow 3% annually. Vacancy is a 5.5% for the Airport Area, which implies many Orange County residents are willing to pay a premium for convenience. Residents of Orange County are forced to remain in the renter pool longer as a result of rising single-family home prices and tighter lending standards. As single-family prices continue to skyrocket and the number of yearly permits decreases, the demand for multifamily units grows larger. From 2010 to 2017 the number of total housing units delivered, both single-family and multifamily, averaged 7,746 units annually compared to 9,486 units of total demand. The disparity between supply and demand for residential units coupled with rising single-family home prices support a sustained supply of multifamily construction.