The multifamily vacancy rate across Southern California in Q1 2018 was down 40 basis points from Q1 2017, with Los Angeles County boasting the lowest vacancy rate in Southern California, according to NAI Capital. L.A. County’s decrease to 3.6 percent vacancy for Q1 2018 marked a 50-bps year-over-year decline for the region.
The Inland Empire kept pace with the region’s average, showing a 40-bps decline year-over-year to 3.8 percent vacancy. However, Ventura County was up 20 bps to 3.7 percent, and Orange County was up 10 bps to 4.6 percent.
J.C. Casillas, VP of research and marketing for NAI Capital, tells SoCal Real Estate the rise in those markets was due to new deliveries that hadn’t yet been filled. “Orange County added approximately 1,500 new units in the first quarter of 2018 and has 9,744 units in the construction pipeline. Vacancy has steadily risen there over the past five quarters along with the average asking rent. Ventura County has 3,161 units in the construction pipeline; the average asking rent at $1,805 per month is the highest on record.”
In San Diego, multifamily vacancy held below 4 percent in Q1 2018 for a fourth consecutive year, according to Marcus & Millichap (M&M). The firm credits persistent job creation, out-of-reach home prices and continual expansion of the metro’s Millennial population combining to fuel historically robust multifamily absorption in 2017. This uptick in leasing activity negated the impact of recent deliveries while allowing steady rent growth.
M&M also reports that amid low unemployment, the San Diego metro witnessed a more diverse distribution of job offerings in 2018, led by a boost in biotech, information and communication tech workers. This hiring suggests San Diego employers recruit from outside the metro with increased frequency when filling open positions. The resulting wave of relocations and household formations underpins apartment demand while construction remains elevated.