Southern California experiences multifamily market improvements

Southern California's multifamily market improved this year.

The level of apartment demand for Southern California experienced stark improvement this year as there was heightened rental prices and normalized vacancy rates. These positive trends are expected to continue in the coming years, as well.

All four counties examined – Orange, Inland Empire, San Diego and Los Angeles – strengthened last year, and this should continue throughout this year and 2013, according to the Casden Multifamily Forecast Report from the University of Southern California's Lusk Center.

Orange County has the most expensive home prices out of the four counties examined, which may help property management companies in the area experience price strengthening. The report noted that the county's average rent rate should continue to improve this year, with an average rent rise of 3.3 percent. This is $1.78 per square foot. Next year, the figure may grow another 5 percent. Vacancies for the area should remain around the same level during the next year.

San Diego County should experience a rental average of 3.4 percent this year, which comes out to $1.64 per square foot, while next year it should rise more than 5 percent to $1.67 per square foot, the report explained. Vacancies will likely rise, but the increases may not be significant.

Inland Empire will experience a 3 percent gain in rental prices this year, which equates to approximately $1.26 per square foot, the report explained. This will again rise to 3.8 percent for $1.27 per square foot next year. Vacancies in the area will likely drop this year, but this may rise slightly next year.

Los Angeles County will experience the most significant rental gains, as the average rent will jump nearly 8 percent this year, which makes it close to $2 per square foot, the report added. This should increase again next year, with the figure jumping 9.6 percent. The vacancy rate may rise both this year and next year.

Apartment vacancies may increase next year
Slight increases in multifamily vacancies may be a theme throughout much of the country next year. According to a report from CBRE Group, the multifamily vacancy level will increase to 5.3 percent next year. This is nearly one percentage point higher than during the third quarter, but the figure should decline slightly in 2014.

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