Thank you for sharing!

Your article was successfully shared with the contacts you provided.

(To read more on the multifamily market, click here.)

IRVINE, CA-The Inland Empire has been named the top multifamily investment market to watch with Orange County coming in second, according to the multifamily edition of Orange County-based Sperry Van Ness’ “Top 10 Markets to Watch” report. Las Vegas, Orlando and San Jose round out the top five markets, respectively.

“Together, San Bernardino and Riverside counties represent the complete package when examining all of our index metrics, as they rank near the top in almost every category,” according to the report, whose index metrics include, among other things, population growth, home affordability, vacancy and rental trends.

“While the Inland Empire’s cost of living is still higher than many parts of the country, it pales in comparison to that of Los Angeles and Orange County. As such, the region is experiencing tremendous growth.”

The Inland Empire is expected to add 40,500 new jobs and 13,000 more residents in the next 12 months. However, with single-family home prices on the rise, the report from the Irvine-based company gathers that the available renter pool will continue expanding for several more years. That, combined with a relatively low inventory per capita of just 0.25 units per person, leads the study to theorize that vacancy will improve 20 basis points, to 4.2%, over the next year.

Orange County, the No. 2 market to watch, came in high on the list because, according to the study, “with single-family homes priced well beyond the means of most Orange County residents, many households [have] become renters by necessity.”

As such, the study predicts that vacancy will fall 20 basis points over the year, to 3.2%. Orange County will also add more than 22,000 new jobs in the next 12 months, equaling a 1.5% increase.

“With Orange County at the top [of the list], investors are asking, ‘How much upside is there left?’” John McDermott, regional manager of Sperry Van Ness, tells GlobeSt.com. “That’s the real question. The answer [or motto] for many investors appears to be, “I want to own what is scarce and getting scarcer through the next real estate cycle and beyond.”

And scarcity does appear to be a significant theme throughout the Orange County market, with McDermott noting that, “Orange County will be out of developable land by 2025 and the Inland Empire is the only way direction growth can occur.”

Job growth and new residents were important indicators throughout the study. The study notes that Las Vegas, the No. 3 market to watch, will add 57,000 new residents and 36,000 more jobs. No. 4 Orlando will take in 35,000 new jobs and 62,000 new residents, as vacancy has improved more than 300 basis points over the past few years. The study also cites that San Jose, No. 5 on its list, has seen the 18- to 34-year-old demographic expand so much that it now accounts for more than 16% of the area’s total residents.

Nos. 6 through 10 on the list are: San Francisco, Washington DC metro, Raleigh/Durham, Phoenix and Tucson.

The study asserts that each of these markets is expected to see strong population and rental growth in the next year, which will lead to increased income potential for investors.

Sperry Van Ness’ report, which is valid through Q3 2007, comprised its list based on future trends and on the markets that showed the greatest potential for income growth based on economic indicators. Cap rates, prices and historic market data, though considered, were not heavily emphasized.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


GlobeSt. Multifamily Spring 2022 (Formerly APTS)Event

Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt
Live Chat

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.