Orange County multifamily vacancy holds steady as supply rises

Orange County multifamily market overview

Orange County multifamily operating conditions are better than they may seem at first glance. Rent growth appears light but is improving compared to recent periods. The 0.6% increase in rent during the second quarter was double the trailing three-year quarterly rent growth average. Vacancy has gone unchanged since the fourth quarter of last year, and the trailing 12-month upward shift in vacancy is still in line with the trailing five-year average. Employment is effectively flat from one year ago, though this is an improvement from the steady decreases that this market posted in prior periods. In the past five years, total inventory has increased by roughly 4%; in the past six months alone, there has been a nearly 1.5% increase in total inventory. This wave of new units is expected to subside during the next year, allowing for any negative impacts to vacancy to be short-term while rent growth is expected to persist.

All multifamily investment sales this year have been Class C properties after accounting for 40% of total activity last year. Despite there being a more balanced transaction mix in 2025, median pricing is still up this year, driven by an increase in pricing for Class C assets. When compared only to lower-tier property pricing from last year, these properties are changing hands for 33% more in 2026 and nearly match the 2024 peak for Class C only pricing. Half of all sales this year have been in Anaheim, where only around 10% of trades took place last year. The remaining sales this year have been split between Garden Grove and Brea. Between these three aforementioned submarkets, Class C pricing surpasses the previous Class C peak by 5%. The properties that have changed hands in 2026 are 52 years old on average, compared to 35 years old in 2025. Most properties that have sold this year are within close proximity to Interstate 5.

Looking ahead for Orange County

Absorption has slowed recently in Orange County, coinciding with the downward trend in total employment. As employment begins to improve in the coming quarters, so should multifamily demand. This rise in demand is likely to trail the pace of increasing supply, pushing the vacancy rate higher, though the rise should be relatively modest and short lasting. Rents are forecast to continue ticking higher at a steady rate, supported by the bulk of new units coming to market and vacancy conditions below 5%. Many of the new apartments that are set to deliver this year are in Anaheim, so that area will likely give up the lead spot for vacancy improvement, though rents in this area are expected to improve.

While there may be some activity in other submarkets, the majority of multifamily sales in the second half of the year are expected to be within the Anaheim and Garden Grove areas where most of the activity has already been concentrated this year. Similarly, Class C assets are forecast to account for most of the transaction mix this year, though some Class B properties should come into the mix. The total number of multifamily transactions this year is expected to surpass 2025, though likely by a small margin. As the wave of new construction begins to ease, investor interest in newer and higher-quality assets may rise, pushing transaction volume higher and creating more diversity in the mix of submarkets that contain activity.

Connect with our Irvine team today

For a more complete analysis of the supply, demand, vacancy, rent and investment trends in the Orange County multifamily market, download and read the full report below.

The Northmarq Irvine office provides a broad range of commercial real estate solutions across debt, equity and investment sales. Engage with our Irvine, CA team today.