Orange County Multifamily MarketView Figures Q3 2018
The Orange County multifamily market has been extraordinarily dynamic over the past year, with net absorption and delivery totals reflecting sustained high levels of demand and completions. For the year ending Q3 2018, net absorption and delivery totals reflected sustained high levels of demand and completions.
As the 12-month new completions total outpaced demand, the Q3 2018 vacancy rate tightened slightly year over year to 3.8%.
In Q3 2018, the average monthly effective rent of $2,040 was up by 2.6% from the prior year. The average rent has increased for 33 consecutive quarters.
Multifamily investment in Orange County totaled $226.6 million in Q3 2018, according to Real Capital Analytics (RCA)—down by 66.6% year over year and the weakest quarter since Q1 2016. For the year ending Q3 2018, however, investment sales rose by 3.4% from the year ending in Q3 2017. The average cap rate for multifamily trended flat at 4.5% during the last two quarters.
The largest category of investors for the first half of the year was private buyers mostly looking for value-add opportunities. This category includes non-traded REITs, family office and private companies investing primarily their own capital. Purchases made by private buyers represented 57.6% of the investment total. Institutional capital accounted for a growing share with 37.7% of multifamily investment this year (up from 24.2% in 2017), while cross-border capital represented 4.1% (down from 20.2% in 2017).