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Thursday, Mar 28, 2024

Real Estate—Apartment Rents Keep Rising Despite Slow Economy

Don’t tell the owners of multifamily housing units in the San Fernando Valley that the economic boom has gone bust. Rents for Valley apartment units continued their upward climb in the second quarter, increasing anywhere between 4.7 percent and 8.6 percent, depending on size, over the comparable period last year, according to figures just released by RealFacts, a Novato-based service that tracks rental trends. In a sample that included most Valley zip codes, the report found the average apartment rental in the Valley rose 6.1 percent to $1,170 per month, compared to $1,103 for the second quarter last year. The steepest increases occurred in rents for singles and two-bedroom, one-bath units. On average, rents for singles in the period were $758 per month, an 8.6-percent increase over the second quarter of 2000 when rents for the same-size unit averaged $698 per month. Two-bedroom, one-bath unit rentals rose 8.5 percent, averaging $1,163 per month, compared to $1,072 per month last year. Average rentals for one-bedroom units increased 6.5 percent to $1,002 per month, and average rentals for two-bedroom, two-bath units rose 7.7 percent to $1,305 per month, the RealFacts report revealed. In general, Valley rental rates remained below the averages in Los Angeles County, but not by much. On average, L.A. County units rented for $1,200 in the second quarter, up 9.6 percent from the second quarter of last year. In the Valley, the rise in rental rates corresponded to occupancy trends showing that units have remained virtually fully occupied for nearly two years now. In the second quarter of 2001, occupancy rates in the Valley stood at 96.4 percent, down slightly from 97.7 percent in the same period last year, but still reflecting the shortage in housing supply. The RealFacts report surveys only larger apartment complexes, and the company’s data tends to skew somewhat higher than the actual market as a result, RealFacts officials caution. Brokers say that while they too are seeing a continuing increase in apartment rentals, the growth is not occurring across the board. “We think they’re going up slightly for most properties, but for the luxury, high-end, newer properties, those are not going up and, if anything, they’re flattening,” said Katherine Bergh, a broker with Marcus & Millichap Real Estate Investment Brokerage Co. in Encino. “Some clients are having to reduce rents.” Bergh said the softness has not resulted in substantially higher vacancy rates, but units are staying on the market longer. “I think people are cutting back spending,” she said. “Class A has been bumped up to the max over the last few years, and it’s harder to get those rents today.” That situation, however, has not translated to more properties coming on the market for sale, Bergh said. For several years now, as the apartment market has rebounded, the number of properties for sale has been in short supply, and landlords are still reluctant to give up what they believe will continue to be cash cows. “Owners still believe, like people believed in the late ’80s, that prices will go up and up, and they don’t want to leave money on the table,” Bergh said. “I don’t know where they think the people are going to come from that keep paying these rents.” Verizon Sells Building Verizon is selling its 426,000-square-foot office building in Thousand Oaks to Baxter Healthcare Corp. Terms of the deal, expected to be completed sometime next year, were not disclosed. Verizon will move 1,100 employees currently working at One Verizon Way to two of the company’s other properties nearby. In addition, some of the workers will remain at the One Verizon Way building under a lease deal with Baxter. “Consolidating our employees in buildings that Verizon already owns or leases saves money and lets us improve efficiency and maintain high quality customer service,” Tim McCallion, Verizon Pacific regional vice president, said in a statement. The sale requires the approval of the California Public Utility Commission. Industrial Strength Striks Properties has begun construction of a 43,000-square-foot industrial center in North Hollywood. The $3-million development will consist of three buildings, two in the 7,000-square-foot range and one of 25,316 square feet. The development is on a 1.8-acre parcel at 7324 and 7336 Bellaire Ave. and 12638 Saticoy St. The property is being marketed by David Hoffberg at Delphi Business Properties and will be available beginning in the fall. L.A. Law The Law Offices of Kulik Gottesman & Mouton leased 10,000 square feet of space at the Imperial Bank Building at 15303 Ventura Blvd. The firm will be relocating from Century City. The firm made the decision to relocate to Sherman oaks because several of the partners reside in the area. Gina Guarino, a broker with Douglas, Emmett and Co., represented Douglas Emmett, which owns the Galleria. Mark Berman, a broker at Coldwell Banker Commercial WESTMAC, represented the tenant. Land Grab D & L; Studio Transportation, a movie equipment storage company, leased 10.7 acres of industrial land in Lakeview Terrace. The 10-year lease is valued at $3.25 million. D & L;, which does business as Desmond’s Studio Production Services, will occupy the property at 12000 Paxton St. Darrin Nickerson, real estate manager for Investment Development Services Inc., represented D & L.; Michael Hooker at Delphi Business Properties represented the landlord, Woods-Hayden Partnership. Senior reporter Shelly Garcia can be reached at (818) 676-1750, ext. 14 or by e-mail at [email protected].

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