Southern California's Biggest Landlords on Way to Rental Recovery
Major Southern California landlords reported rent cuts last year of 5.3%. However, recent numbers show this tide is changing in favor of the landlords.
The party, it seems, is nearing an end.
The Orange County Register looked into the four biggest Southern California apartment owners' most recent numbers -- AvalonBay, AIMCO, Essex Property and Equity Residential -- and came up with a handy chart to track what it all means. These publicly traded companies provide quarterly reports, thus offering a sample of the health of the apartment market that can be gleaned from their stats.
The four companies have a combined 39,000 units in Southern California (and even more across the United States) and, again, thanks to The Register's chart, you can track a 5.3% average rent decrease in the past year. However, with occupancy up and people choosing to stay in the same apartment rather than move, these owners feel that they will be seeing improvements to income in the coming year.
On their 2010 earnings call, AIMCO said that they were 'cautiously optimistic' (heading into leasing season) because they have been able to retain rentals and are at a 95% occupancy rate:
"The good news is that we are basically seeing recovery across most markets. It's relative of course in places like Phoenix and Miami, less so relative to rate increase, but are doing fairly well. I'd point out that we only have two markets in our entire portfolio that's below 95%.
So I think that the coasts, of course, we're seeing the Northeast and Southern California and pretty much everyplace outside of Phoenix and Florida where we're very highly occupied and we're taking rate increase through the first quarter and we feel very comfortable that we'll be pretty set up for the summer season. So in total, we're seeing it across the board. It's just relative levels of strength depending on the market."
Equity Residential also is reporting "a broad based recovery." Landlords are in it to make a profit, and if occupancy is strong, prices would seem to be at rates that the market can handle -- all of which points to rents inching up.
Landlords have another factor in their favor -- population. There will be a 6 percent increase in adults over 24 -- or roughly 4 million people -- in the next five years, which means more people needing apartments. Another boon for the landlords seeking higher rents.
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