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Apartment Rents Highest Ever in Survey

Housing: Average for O.C. hits $802 monthly, up nearly 3% in a year. But the vacancy rate rises to 5% as new units come on market.

June 13, 1996|DEBORA VRANA | TIMES STAFF WRITER

LAGUNA HILLS — The average rent for an Orange County apartment during the first quarter of 1996 increased to the highest level in at least 12 years, signaling further strength in the real estate market.

The average rent rose nearly 3% to $802 a month in Orange County from $781 during the same time last year, according to a recent survey from Research Network Ltd., a Laguna Hills data group. The rate is the highest since the survey began in 1984.

Surprisingly, the increase in rents comes as vacancy rates countywide jumped to 5% from 4.2% the same time last year, as a boom in new apartment building has increased the number of empty apartments in older buildings.

"Rents are finally starting to move up. They have been terribly depressed for years and years," said Pamela S. Wooldridge, president of Research Network. "This economy is really starting to roll. Rents should continue to rise."

Rents in the county have declined or remained stagnant during the past five years because of the real estate downturn.

Of the Orange County cities surveyed, La Habra posted some of the lowest rents with an average of $641, while Seal Beach had the highest rents, $1,277 a month, although the average-size apartment there is 18% below the county average of 860 square feet.

Newport Beach reported the second-highest rents, averaging $1,006 per month.

Rancho Santa Margarita and Trabuco Canyon posted the biggest jump in rents, with average gains of 7%. Lake Forest and Stanton also posted strong monthly rental increases.

"South County generally leads the way in terms of recovery," Wooldridge said.

The annual study has tracked rents and occupancy rates in the first quarter of each year in Orange County, surveying about 100,000 apartments, or about half the county's apartment stock, and coming up with an average rent.

During 1995, 1,759 apartment units were built in Orange County, the highest level since 1991. This boom in apartment building, spurred by an improving economy and the desire of some workers to live in apartments although they could afford a home, is helping to increase vacancy rates in older buildings.

One major apartment builder, Irvine Apartment Communities Inc., currently has nearly 560 units under construction.

IAC, the publicly traded apartment arm of the Irvine Co., Orange County's largest landowner, owns 50 apartment communities in Orange County representing more than 13,500 rental units.

"One reason rents are going up is the newer apartments being built, which have higher rents," said Steven P. Albert, IAC president. "The market is causing that to happen."

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Apartment Rents Heading Up

An annual survey shows that the average Orange County apartment rents for $802 a month, a 3% increase over last year and the highest rate since the survey began in 1984. At the same time, the vacancy rate jumped to 5% because of vacancies in older buildings brought on by a boom in new apartment construction.

Average apartment rents*

1996: $802

Vacancy rate

1996: 5.0%

New apartment construction

1995: 1,759 units

* Based on a weighted average of 99,000 apartment units surveyed

** Negative number due to the conversion of a new apartment building to condominiums.

Source: Research Network Ltd.

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