Orange County Apartment Occupancy Slips Slightly and the Pace of Rental Rate Growth Eases
(April 5, 2001) — In early 2001 Orange County’s apartment market lost some of the momentum evident throughout year 2000. Net move-outs in the January-March time frame pushed occupancy back down to roughly the level seen a year ago, and rents stabilized near the rates recorded in late 2000.
The latest edition of M/PF Research’s Orange County Apartment Report shows an occupancy rate of 96.7 percent, essentially in line with the 96.8 percent occupancy figure from early 2000 but down from the recent peak of 98.2 percent in mid-2000. This slip in occupancy slowed the metro’s previously robust growth in rents. Measured on a same-store basis, rents increased 9 percent from 1st quarter 2000 to 1st quarter 2001, but all of this growth actually occurred in calendar 2000. March 2001 rents were virtually unchanged from the rates seen in December 2000.
Average rents in Orange County now register at $1,195 per month. Newport Beach remains the metro’s most expensive neighborhood. Rents there average $1,620, and rates for product built in the past decade reach a norm of $2,029. At the other end of the spectrum, Anaheim’s average rent is $914 overall.
“Affordability constraints seem to be impacting the apartment market performance in Orange County,” said Greg Willett, M/PF’s director of research products. “The aggressive rent growth pace seen in 2000 appears to have forced some households to seek lower-priced apartments in parts of the Inland Empire or Los Angeles. Furthermore, it’s no coincidence that Anaheim, which offers Orange County’s lowest rents, maintains the highest occupancy rate, whereas the especially expensive Newport Beach area registers below-average occupancy.”
Losing a net 1,300 renter households in 1st quarter, annual demand for apartments in Orange County dipped to 1,170 units during the 12 months ending in March. Deliveries of new product totaled 1,366 units in the year-ending 1st quarter, though no new supply came on stream in January-March.
While relatively little additional product was completed recently, ongoing building activity continues to intensify. Roughly 5,000 units were under construction at the end of 1st quarter, with about three-fifths of this new product in the pipeline located in the city of Irvine.
“Near-term completions will grow the base of existing apartments in Orange County by a little more than 2 percent, so ongoing development is moderate in comparison to metro size,” Willett said. “However, this new construction notably surpasses typical deliveries during the past decade, and the fact that such a large share of the building is concentrated in a single neighborhood is not ideal.”
|Orange County Apartment Market Profile
1st Quarter 2001
|Annual Employment Growth||50,500 jobs|
|Annual Apartment Completions||1,366 units|
|Annual Apartment Demand||1,170 units|
Change in Past Year
|Average Quoted Rent
Change in Same-Store Rents
|$1,195 per month
M/PF’s Orange County Apartment Report is a quarterly report that includes data and analysis addressing the local economy and trends in apartment demand, supply, occupancy and rents. Information is summarized on the metro level and detailed for 10 submarkets.
Founded in 1961, M/PF Research is the trusted national expert in apartment market research, each quarter conducting primary research on property performance in more than 50 U.S. metropolitan markets. M/PF is retained by investors, developers, owners and lenders to prepare project-specific market studies and to produce broader, strategic market selection analyses and reports. M/PF Research, located in Carrollton, Texas, is a wholly owned subsidiary of RealPage, Inc., a leading provider of property management software and web services.