LOS ANGELES, Mar 30, 2004 (BUSINESS WIRE) -- Southern California's strong economy, continued immigration and a shortage of new units will drive up the region's apartment rents an average of 6 to 8 percent over the next two years, according to the Casden Real Estate Economics Forecast released today by the University of Southern California Lusk Center for Real Estate (www.usc.edu/lusk). In 2003, monthly rents averaged $1,300 in Los Angeles County, $1,260 in Orange County and $900 in Riverside and San Bernardino counties. "We'll continue to see strong demand from tenants moving into Southern California, especially from young singles wanting efficiency units and larger Latino immigrant families needing three-bedroom apartments," said Raphael Bostic, Ph.D., director of the Casden Forecast. "The big problem is that there are just too few units available for people to move into right now. Cities need to be more aggressive about allowing higher density projects in urban areas, but unfortunately, neighbors often reject this approach." Los Angeles County Forecast Although Los Angeles County is expected to have slow economic growth over the next two years, a lack of supply coupled with continued strong demand means rents will continue their inexorable rise. Rents are expected to increase slightly less than 6 percent in 2004, followed by a 7 percent jump in 2005 when average rents will increase to $1,400/month. Submarkets with significant populations of immigrants and lower-income renters such as East Los Angeles, the San Gabriel Valley, Long Beach and Central Los Angeles will see higher occupancy and strong rent growth through 2005. Orange County Forecast Orange County's economic and job growth will accelerate through 2005, driven by the expansion of its key technology, engineering and communications sectors. Likewise, the county's apartment market will continue to grow, driving occupancy rates to nearly 97 percent by year-end 2005. This year, rent growth of 6 percent will be the norm. In 2005, it will average 9 percent -- one of the highest growth rates in the nation. Two of the most affordable submarkets -- Anaheim and Santa Ana -- will remain strong, as newly created jobs, coupled with on-going immigration, increase pressures on rents. Inland Empire Forecast In 2004, as in the previous five years, the economies of Riverside and San Bernardino counties will outperform those of LA and Orange counties. The Inland Empire's strong economy will drive up rents 8 to 8.5 percent over the next two years, and the region's average rents for the first time will reach $1,000/month. Three-bedroom units could climb to $1,400/month by the end of next year. In the Riverside/Corona/Moreno Valley and Southwest Riverside County submarkets, rents will soar by 10 percent annually over the next two years, thanks to the proximity of large job markets in Los Angeles and Orange Counties.
March 30, 2004