Apartments Show Sharp Rise in Prices

The price paid for apartment buildings in Orange County ratcheted up sharply at the end of last year, a trend continuing amid heavy buyer demand, multifamily experts report.

There is “a total lack of inventory,” says Joe Berkson of Marcus & Millichap, a brokerage specializing in apartments.

Factors include years of little construction and fewer foreclosure sales by banks. Owners also are holding off selling in the hope prices will rise still further, he said.

The tight market pushed down sales of 16- to 36-unit complexes to 39 last year from 74 the previous year, Marcus & Millichap research shows. Meantime, the cost per unit rose by 21.5% to $48,932.

Along with the higher price for the buildings come higher rent for the tenants. Irvine Apartment Communities, Orange County’s biggest landlord, reports its average rent rose 6% last year.

And Berkson said that depending on the area and the management, new asking rents these days are 7% to 10% higher than old rents.

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E. Scott Reckard covers real estate for The Times. He can be reached at (714) 966-7407 and at scott.reckard@latimes.com