OC Apartment Market Ranks First Nationally

NEWPORT BEACH, CA-The Orange County apartment market ranks No. 1 in the country and has bumped another SoCal market out of first place in a new analysis by Marcus & Millichap. The annual ranking gauges the outlook for 42 of the country's largest apartment markets based on a series of 12-month forward-looking supply and demand indicators.Orange County climbed up two places this year to claim the No. 1 spot, supplanting the Inland Empire, which was last year's top-ranking market. This year's other top three include Fort Lauderdale as No. 2 and Las Vegas in No. 3 position. Last year's second-place market, San Diego, fell two places to No. 4.Orange County's No. 1 ranking basically means that the county's apartment market "will outperform the nation in 2006," explains John Przybyla, VP of Marcus & Millichap and regional manager of the Newport Beach office. In general, Przybyla says, apartment owners are benefiting from the combined effects of healthy job growth and record-setting home prices, the latter which put home-ownership out of reach for most OC residents.Other specific expectations for the Orange County multifamily market in the next 12 months included a projected 5.6% increase in asking rents to $1,445 per month, a continuing decline in concessions offered by building owners and an increase of 6.5% in effective rents to reach $1,410 per month. Marcus & Millichap forecasts that vacancy will tighten to 3.2%, a decrease of about three-tenths of a percentage point.Developers are expected to add 2,600 units to the county's apartment inventory in 2006, up from 1,500 units last year. The survey notes, however, that many builders are focusing their efforts on condos and some planned apartment buildings may be converted to for-sale units before completion.