Occupancy Rates Roaring Back
Four years after the Northridge earthquake laid to waste many apartment buildings as well as the local economy, occupancy rates in the San Fernando Valley and the rest of the city are outpacing pre-temblor levels in another sign of financial recovery.
In the Valley, all but 2% of the apartment buildings damaged in the 1994 earthquake have risen from the rubble, caulked their cracks and reopened their doors to a massive influx of new tenants, according to a report issued last week by the Los Angeles Housing Department.
The same report shows that 93% of all available apartment units in the Valley were occupied in December, a 2.1% increase since 1993.
Citywide, 93% of apartments also were filled, a 1.7% increase from before the quake.
Private real estate agents and apartment associations corroborated the city’s findings. They also said the trend has been accompanied by a flurry of apartment building sales as investors--some having earned their down payments in a booming stock market--once again look to real estate to secure and increase their wealth.
“Many [apartment] owners are saying, ‘Knock on wood, happy days are here again,’ ” said Mary Ellen Hughes, executive director of the Apartment Assn. of San Fernando Valley/Ventura.
“They’re starting to see a little ray of sunlight, but nobody wants to talk about it because they’re scared it will fade away.”
Hughes credited low unemployment and the entertainment industry’s expansion with the high occupancy rates that have come as a relief to many of the association’s 4,000 members.
“Last year, the vacancy rate in many buildings was as high as 12%,” she said. By the end of last year, however, the association’s figures showed an overall apartment vacancy rate of only 7.2%, both for the Valley and city.
Empty apartments peaked immediately after the earthquake, both the city’s report and the apartment association’s figures show. Northridge, for instance, saw its vacancy rates spike at 33% in December 1994. But those numbers--determined by reading utility meters--include apartments deemed uninhabitable after the quake.
While some association members have viewed the recent recovery as a light at the end of the tunnel, many others see it as an opportunity to get out of the business altogether.
“In the last year we lost 10% of our membership because they sold their buildings,” said Hughes. Most of the people who left the apartment industry, she said, were longtime landlords whose nerves were frazzled by the turbulent times after the quake.
“Most of them are saying, ‘God, I can finally get out from under it, because I can’t handle it anymore,’ ” she said. Other owners have taken the opportunity to snap up many buildings, consolidating their holdings.
Rich Renta, senior vice president of the Valley-based property management company Kenneth Management Group, agreed that the apartment market has become much more robust since 1994.
“A building that used to stay on the market for four or five months now stays on the market for 60 days,” he said. “There’s a lot of money out there.”
Jeannine and Dirk Perriseau bought their first apartment building a year after the quake, thinking that insurance claims and emergency government loans to renovate buildings would actually improve the Valley’s apartment market.
After combining profits from their general contracting business with a city housing department loan, the Perriseaus built a 112-unit complex in Northridge on the site of a quake-destroyed building. They named their new building in the 6900 block of Reseda Boulevard the Sophia Ridge Apartments after their 2-year-old daughter and welcomed new tenants in May 1996.
“By October we hit 90% occupancy and right now we only have two vacancies,” said Jeannine Perriseau, 34. “We’re making a very good return on our money.”
And if demand for apartment space continues to increase, those returns may get even better, said Mike Davis, vice president of the Kenneth Management Group.
“For the first time in a while, a lot of owners are considering rent increases,” said Davis.
Many prospective tenants already complain that affordable apartments are becoming difficult to find.
After four weeks of looking around Sherman Oaks and Studio City for a two-bedroom place for less than $1,000 a month, a frustrated Kathy Naka walked into Apartment Search, a referral service.
“I didn’t think it’d be so hard,” said Naka, 26, a secretary at an accounting firm. “Last night, I even went on the Web looking for stuff, but that didn’t help either.”
Naka said she wanted to live closer to work and to move out of her parents’ house in North Hills “to get out on my own and take some responsibility.”
But she said she quickly found out how scarce affordable apartments are, especially in the more trendy sections of the Valley.
“We found one place we liked,” Naka said nodding to her prospective roommate, “but they wanted $1,400 for it. The majority of them are above our budget.”
She said many landlords did not even bother returning her calls.
Duane Smith, 40, has had an even harder time finding an apartment that is both affordable and wheelchair accessible. Smith, who was paralyzed in a construction accident and receives $710 a month in workers’ compensation and Social Security, will have to leave the room he rents in Simi Valley at the end of the month and has been looking for a Valley apartment for five weeks.
“I’ve looked at four places and called 36 as of yesterday,” he said. Almost none of the places he called were handicapped accessible, he said.
The Northridge earthquake caused estimated total damage of $40 billion to $42 billion and destroyed more than 65,000 housing units in Los Angeles.
More than 19,000 of those homes, mostly apartments and condominiums, were ordered vacated by the city Department of Building and Safety.
Seventeen areas, including more than 7,500 housing units, were vacated and designated “ghost towns” by the housing department.
By the second anniversary of the Northridge earthquake, the housing department, the federal Small Business Administration and several private sources had financed 99% of the units’ rebuilding. And, according to the housing department’s report, as of last week virtually all of the apartments have been repaired.
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Vacancy Rate Recovery
A steady emptying of apartments after the 1994 Northridge earthquake, because of damage and an ensuing economic recession, has dropped significantly in a promising sign of financial recovery.
Percentage of vacancies
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Location 1993 1994* 1995 1996 1997 Canoga Park, Winnetka, Woodland Hills 9.5 14.7 13.5 10.7 7.7 Chatsworth, Porter Ranch 9.0 15.2 12.7 8.7 7.0 Encino, Tarzana 5.6 11.0 9.9 6.0 4.3 Granada Hills 9.0 23.8 16.2 10.0 7.1 Mission Hills 13.1 13.7 14.1 11.9 10.3 North Hollywood 9.2 8.4 8.8 8.0 6.6 Northridge 8.0 33.3 29.8 12.9 7.1 Pacoima, Sun Valley 9.3 8.1 8.4 9.3 7.7 Reseda, West Van Nuys 12.4 18.5 17.7 14.4 10.4 Sherman Oaks, Studio City 6.3 15.2 8.9 6.2 4.1 Sunland, Tujunga, Shadow Hills, Lake View Terrace 10.7 9.4 9.4 8.3 6.7 Sylmar 7.5 16.5 14.5 11.2 7.9 Van Nuys 10.7 11.6 11.3 9.5 8.0 Verdugo Hills 6.3 5.6 5.9 4.5 4.6 San Fernando Valley 9.3 13.8 11.7 9.3 7.2 Greater L.A. 8.9 10.3 9.6 8.3 7.2
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*Note: Quake damaged buildings included.
Source: Jeskor Research and the Apartment Ass. of Greater Los Angeles
