Inland Empire Multifamily Market Leads Nation

The Inland Empire's apartment market posted a mark of 4.5% for expected rent growth, the highest of the 40 markets that Marcus &Millichap tracks, as well as a low vacancy rate of 3.5% and falling, along with good employment growth, 1.9%.

One of the factors in the market's high ranking is the rise of single-family home prices in the Inland Empire. While those prices are still low in the Inland Empire compared with prices in neighboring Los Angeles and Orange counties, home prices are rising rapidly in Riverside and San Bernardino counties, further strengthening Inland's multifamily market, the report notes.

The Inland Empire moved up from last year's ranking of fifth place while last year's first-place market, Sacramento dropped to 10th. The report reflects the changes that have been occurring in the Inland Empire apartment market, which has picked up steam as single-family home prices rise and demographics improve.

The changes also are reflected in the types of apartments being built in the Inland Empire, like the Mira Loma project of Upland, CA-based Lewis Apartment Communities. Lewis' Homecoming At Eastvale in Mira Loma includes townhouses and villas renting for approximately $1,200 to $2,000, a significant increase from what the market would bear only a few years ago.

Marcus & Millichap describes its national apartment index as "a snapshot analysis" that ranks markets based on a series of 12-month, forward-looking supply and demand indicators. Markets are ranked based on their cumulative weighted-average scores for various indicators, including forecasted employment growth, vacancy, construction, housing affordability and rent growth. The team cautions that the index is not designed to predict the performance of individual properties because a good investment in a bottom-ranked market could easily outperform a poor choice in a top-ranked market.