Landlords of Southern California's larger apartment complexes struggled to raise rents and fill vacancies during the first quarter as a weak economy undermined demand for rental housing, according to a real estate report released today.
However, rents continued to climb steadily in San Diego County and the Inland Empire -- areas where the economy has continued to generate jobs -- while Southern California remained one of the nation's strongest apartment markets.
The average monthly rent in Los Angeles, Orange, Riverside, San Bernardino and San Diego counties at the end of the January-March quarter was $1,177, virtually unchanged from the previous quarter and up 4.8% from the year-ago period, according to RealFacts, a Novato, Calif.-based apartment industry research firm.
The first-quarter average occupancy rate dipped to 94.7% from 95.2% in the fourth quarter of 2002.
"When you consider the general economy and general state of job growth, Southern California performed better than a lot of other areas in the United States," said RealFacts analyst Gerald Cox.
The Inland Empire and San Diego County reported the largest and second-largest quarterly rent gains in the West.
RealFacts surveys only large apartment complexes -- usually with 100 units or more -- that tend to charge higher rents than smaller properties. The firm's Southern California surveys cover 1,787 rental properties with more than 410,000 units.
The apartment market in Los Angeles County remained weak during the quarter, with the vacancy rate virtually flat at 94.9%. The average rent during the period rose only $7 to $1,304.
"Following on the heels of a similarly weak performance in the last quarter of 2002, this may indicate that some of the steam has gone out of the L.A. rental market," RealFacts President Caroline S. Latham said.
First-quarter rent growth in Orange County was the weakest in a year, with the average rent climbing only $3 to $1,234 during the period. The average occupancy, meanwhile, dropped one percentage point from the previous quarter to 94.8%.
Mark Verge, owner of Westside Rental Connection, an apartment-listing service, said demand is strong for apartments renting below $1,000, but renters are balking at higher-priced units. As a result, landlords have been cutting rents in addition to offering incentives such as free rent for the first month and move-in bonuses to boost occupancy. A Santa Monica landlord recently cut the $1,600 rent on a two-bedroom unit more than $200 after failing to get a nibble, according to Verge.
