Yardi Matrix: High Demand in the OC
- Mar 04, 2016
Orange County’s expensive single-family housing, coupled with the region’s gains in employment will continue to boost demand for multifamily development and support rent growth.
The area’s economy is benefiting from solid performance in its key industries. In fact, the metro’s job growth topped 3 percent last year, higher than any other year since the beginning of the dot-com boom in 1998 and outpacing the state as a whole, which grew by 3 percent, and the United States, which grew by 2.3 percent. Employment gains were led by the leisure and hospitality industry, which drew a record 47.3 million visitors to Orange County in 2015, up 3 percent from the previous high in 2014. Other expanding payroll segments included construction, professional services, education and health care, and manufacturing.
Sustained by a growing population of young working-class adults, multifamily deliveries totaled 5,200 units in 2015, the most since before the housing bubble popped. With 7,200 apartments under construction as of January, the metro should see another strong year of inventory growth in 2016. And since apartment vacancy rates are very low in Orange County, absorption will likely keep up with the pace of construction, with rents expected to rise more than 5 percent in 2016. However, the lack of affordable housing for young professionals and middle-income families could limit the area’s growth potential in the near future.