Report shows healthy job creation pushes vacancy lower
NEWPORT BEACH, CALIFORNIA (JAN. 17, 2019) – NorthMarq’s Investment Sales group has published its first market research report for the Orange County and Inland Empire multifamily submarkets, offering in-depth research and on-the-ground expertise about multifamily market conditions and trends. The company continues to grow its multifamily investment sales platform and added the southern California market in October 2018.
“Service to our clients is one of our core beliefs. This research gives our clients the insight and trends to provide them with actionable information that can help guide their investment activity in the Southern California submarkets,” said Shane Shafer, managing director – NorthMarq’s Investment Sales team in Southern California. “We believe in providing the best information to help navigate and find the best opportunities in the market.”
“The report released today shows that employment gains have kept apartment demand strong with low vacancy and continued construction activity, where 2,600 apartments were delivered in the third quarter in Orange County. Inland Empire continues to see low vacancy and rising rents as the submarket absorbs existing units,” said Pete O’Neil, director of research, NorthMarq Multifamily.
Orange County Key Findings: Employment Gains Driving Rental Demand, Low Vacancy Rates
- The Orange County multifamily market was steady during the third quarter. Renter demand for apartments is strong, keeping the vacancy rate unchanged from the second quarter to the third quarter at 4 percent.
- More than 2,600 units have come online to this point in 2018, and nearly 5,000 apartments are currently under construction.
- Rents have generally been on an upswing, but there was a modest dip during the third quarter. Current asking rents are $1,922 per month, 2.8 percent higher than one year ago.
- Sale prices have been posting robust gains, particularly as some newer properties have been changing hands. The median price has spiked nearly 30 percent from 2017 to 2018, reaching approximately $340,000 per unit. Cap rates have compressed to an average of about 4.3 percent.
Inland Empire Key Findings: Consistently Low Vacancy, Steady Demand Pushing Rents Higher
- The Inland Empire multifamily market continued to post steady performance in the third quarter. The market is highlighted by low vacancy and rising rents. Looking ahead, apartment construction should accelerate, although employment growth should be sufficient to absorb much of the new inventory.
- Apartment vacancy in the Inland Empire has been very steady through the end of 2018. The rate ended the third quarter at 3.2 percent, identical to the vacancy rate in both the first and second quarters of 2018. Vacancy is up 30 basis points year over year.
- Local asking rents have posted consistent gains thus far in 2018. Asking rents ended the third quarter at $1,349 per month, 3.5 percent higher than one year ago.
- After a slow first half of the year, sales of apartment buildings accelerated during the third quarter. Prices and cap rates thus far in 2018 have closely tracked levels from last year.