Real estate investment trusts have been snapping up Orange County apartment complexes for some pretty extravagant sums. But these high prices aren't so outrageous, industry experts say, considering where the apartment market is headed.
Multifamily construction starts are expected to drop off this year after a whirlwind of activity last year at Irvine Ranch and in south Orange County, according to a research report by Marcus & Millichap. With vacancy hovering at about 3%, rents are expected to rise another 4% this year.
"Housing prices are on the way up, and the less affordable single-family housing gets, the more attractive renting becomes," said David E. Jones, Marcus & Millichap regional manager. Jones expects the average price increase to hit 6% by year's end. By the end of June, the average price for apartment complexes already had increased 3.5% to $52,000 per unit.
And a few recent deals in choice coastal communities far exceed these prices. The 563-unit Toscana in Irvine sold this year for more than $51 million, or $90,500 per unit, while Huntington Breakers, a 342-unit complex, sold this week for $30.4 million, or $88,888 per unit.
Melinda Fulmer covers real estate for The Times. She can be reached at (714) 966-7832 and at email@example.com