Interesting bit on 08' Apartment Vacancies

NEW -> Contingent Buyer Assistance Program
optimusprime_IHB

optimusprime_IHB

New member
I like to read the Lasner blog on the OC Register website...just thought I'd post this for some of you who don't read it. Makes me wonder what it's going to be like for IAC rentals when the CPW, Calypso, and Camden projects hit the market.



<a href="http://lansner.freedomblogging.com/2008/04/13/new-units-will-push-up-irvinenewport-08-apartment-vacancies/">http://lansner.freedomblogging.com/2008/04/13/new-units-will-push-up-irvinenewport-08-apartment-vacancies/</a>



New units will push up Irvine/Newport ?08 apartment vacancies

April 13th, 2008 ? 4 Comments ? posted by Mary Ann Milbourn



The USC Casden Real Estate Economics Forecast says the nearly 4,300 new apartments coming on line in Irvine from 2007 to 2008 will nudge vacancies up in that city and in neighboring Newport Beach.for-rent-sign.gif Irvine added 2,103 units last year and is expected to see 2,181 more come on the market in 2008 ? fully 85% of all the new apartments in the county in the last two years.



Delores Conway, director of the Casden study, says the ?shadow market? of condos and homes that have been converted into rentals during the real estate downturn also might be contributing to apartment vacancies.

Pressure from all the additional units on the market is beginning to show up in the numbers. About 4.6% of Irvine?s apartments were vacant in the fourth quarter of last year, up from 3.8% in the same period in 2006. Meanwhile, the county?s overall vacancy rate barely moved from 3.5% at the end of 2006 to 3.8% in the fourth quarter of last year.



Newport Beach saw the biggest increase in vacancies in the county last year, hitting 6.2% in the fourth quarter, up from 5.2% in the last three months of 2006. Conway attributed that, in part, to the new units in Irvine but also to Newport Beach?s high rents, which averaged $2,107 at the end of 2007. Rents averaged $1,550 countywide.



The Casden report?s conclusion:



?We expect occupancies in the Newport Beach and Irvine submarkets to continue softening in the near term, due to the large supply of new apartments expected for 2008 in the Irvine submarket. These projects should generate significant interest from renters, but demand may soften from this year.?
 
Whoo Hoo! Lower rent rates... lets just see if I can hold onto a job....



On the other downside I'm lucky that the rents that I charge are are 5% lower than the comps recommend.... (that's how I generate interest, better product lower cost).



good luck

-bix
 
As you have probably read from several other threads, TIC is still building new rental inventory. They probably have a much longer time horizon for returns on these rental apartments and it generates future "buy" customers who get to know the area.
 
"These projects should generate significant interest from renters, but demand may soften from this year" That's complete BS and was clearly written by an analyst, not someone that knows Irvine or Orange County. Those projects are clearly overpriced, even in terms of an IAC dominated market. I think they are what's going to ultimately drag the occupancy rates down.



sure, shadow market effect may be contributing to some vacancies, but it's not even worth mentioning when compared to the effect of job loss in the county. Shadow market effect, in my opinon, is overrated. If you can't manage your money well, aka buying a massively over priced house, you aren't going to be able to manage tenants.
 
[quote author="IACRenter" date=1208218556]As you have probably read from several other threads, TIC is still building new rental inventory. They probably have a much longer time horizon for returns on these rental apartments and it generates future "buy" customers who get to know the area.</blockquote>


And aren't almost all of those new units in Irvine? I thought I remembered reading that somewhere... that most of the new apartment units in OC over the next year are in Irvine.
 
[quote author="k.o." date=1208322771][quote author="IACRenter" date=1208218556]As you have probably read from several other threads, TIC is still building new rental inventory. They probably have a much longer time horizon for returns on these rental apartments and it generates future "buy" customers who get to know the area.</blockquote>


And aren't almost all of those new units in Irvine? I thought I remembered reading that somewhere... that most of the new apartment units in OC over the next year are in Irvine.</blockquote>


Nope, probably a majority but IAC's enclave to Costa Mesa is pretty large. There are 5 under construction buildings in Platinum Tri, all of which will be apartments. That's probably 2K of units. That's going to be a blood bath
 
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