Multifamily Orange County Report – Winter 2019
Demand for apartments is solid, sustained by steady employment and population gains. Bolstered by its highly educated workforce, the metro accounted for 24 percent of Southern California’s GDP in 2017.
Orange County rent evolution, click to enlarge
Multifamily investment remains a smart play in Orange County, where demand for apartments is solid, sustained by steady employment and population gains. A high barrier to homeownership and a chronic shortage of workforce housing are driving rent growth, while keeping occupancy in stabilized properties above the national average.
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Thanks to its highly educated workforce, Orange County has long been an economic powerhouse for Southern California, accounting for 24 percent of the region’s GDP in 2017. Employment growth during the 12 months ending in November was led by education and health services, which gained 8,000 jobs, a trend that is set to continue as the region’s senior population expands. Leisure and hospitality added 6,500 positions, boosted by the ongoing increase in tourism-related spending. On the other side of the spectrum, many low-wage jobs were lost to technology and automation.
Orange County sales volume, click to enlarge
Multifamily investors traded $1 billion in assets in the first 10 months of 2018. Following the rejection of Proposition 10, which would have allowed local governments to expand rent control, investments could accelerate in the foreseeable future. Developers have also been active, as more than 4,800 units were under construction as of November. Absorption is set to stay solid, giving property owners leverage to further hike up rents.
