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LOS ANGELES-Some of the nation’s largest developers and other real estate experts agree that California’s red-hot apartment market is finally starting to cool a bit, but few builders say they’re worried enough to begin scaling back on the number of new projects they have planned for the Golden State.

“Rent levels are still looking pretty good,” says Laurie Lustig-Bower, a CB Richard Ellis senior vice president and one of the LA-based firm’s top apartment brokers. “However, people are being more conservative, saying rents will hold firm or increase just slightly.

“In the next five years, I don’t think we are going to see the type of growth rate that we saw in the last five years,” she adds. “I think you are going to see a more conservative investment [scenario] with more usual returns, maybe less than 10% a year.”

Lustig-Bower was one of several top multifamily experts who spoke with GlobeSt.com during breaks at the recent “Apartments 2001″ conference at the Century Plaza Hotel. More than 1000 real estate pros attended the daylong gathering, which was organized by Beverly Hills-based Real Estate Conference Group. The event’s media co-sponsors included GlobeSt.com and two of its print sisters, Real Estate Southern California and the national Real Estate Forum.

At the conference and in one-on-one interviews, few builders say they’re slashing their number of projects planned in California or even weaker parts of the nation despite the economic slowdown.

“We will start construction on about $500 million in new apartments this year,” says W. Dean Henry, president of Foster City-based development giant Legacy Partners Residential Inc. “The very best time to be building apartments is during a slow economic time, as long as that slow period doesn’t last that long. Usually, prices are down, construction labor is a bit cheaper and you see more opportunities.”

About half of Legacy’s current Southern California activity is in LA County, Henry adds, with much of the rest in San Diego. “We like the fundamentals of the greater Los Angeles apartment market,” the executive says. “We like the strong port, the highly diversified economy that’s not dependent on one or two industries [and] the 55,000 to 60,000 new jobs that the county is going to create this year. So we are going to remain very active in the LA marketplace.”

Perhaps surprisingly, many builders in the tech-battered Northern California market remain bullish on their area too. “In the Bay Area, one of the big problems we have right now is that rents are going down,” says Vicki Mullins, chief operating officer of Prometheus Development Co. “The rents on our portfolio have gone down 19%.”

It has been even rougher in Santa Clara County, Mullins adds, where apartment rents have fallen as much as 30%. “Plus, we have high construction costs and land prices where we haven’t seen any relief. But we’re in it for the long run, and we think the returns will get [back] up there.”

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