By Bob Howard LOS ANGELES-Rents will rise an average of 6% to 8% in Southern California over the next two years, according to a new Casden Real Estate Economics Forecast from the Lusk Center for Real Estate at the University of Southern California. The forecast cites Southern California’s strong economy, continued immigration and a shortage of new units as factors that will drive up rents, which in 2003 averaged $1,300 in Los Angeles County, $1,260 in Orange County and $900 in Riverside and San Bernardino counties. The Casden Forecast analyzes apartment transactions, new building permits, leasing activity and employment data to produce forecasts of rent and vacancy levels in Los Angeles County, Orange County and the Inland Empire. Raphael Bostic, director of the forecast, says strong demand for apartments will continue from tenants moving into Southern California, especially from young singles wanting efficiency units and larger Latino immigrant families needing three-bedroom apartments. “The big problem is that there are just too few units available for people to move into right now,” Bostic says. Despite what is expected to be slow economic growth over the next two years in Los Angeles County, the forecast predicts that the supply-demand imbalance will boost rents by slightly less than 6% in 2004, followed by a 7% jump in 2005, when average rents will increase to $1,400. In Orange County, the forecast expects economic and job growth to accelerate through 2005, driving occupancy rates to nearly 97% by year-end 2005. The outlook is for rent growth of 6% this year and 9% in 2005. In the Inland Empire, the forecast says, 2004 will continue the trend of the past five years as the economies of Riverside and San Bernardino counties will outperform those of L.A. and Orange counties. Despite a large number of new units coming on the market over the next two years, occupancy will hover around 97% as “a continued influx of new trade-related jobs” will bring even more workers to the region, the Casden forecast believes. It foresees rent increases of 8% to 8.5% for the two-county region during the next two years.
April 1, 2004