econowatch/dy/12″/mike1st/mark2nd The December apartment vacancy rate for the San Fernando Valley fell substantially from the like period a year ago, according to this month’s Valley Econowatch. The 9.3 percent rate was unchanged from November, but down from 11.7 percent for December, 1995. Industry specialists point out that apartment vacancies moved steadily downward for much of 1996, and that trend should continue in 1997, as the local economy improves. “You don’t see a lot of construction and haven’t had a lot of construction (of new Valley apartments) in the last five years. So with the economy gaining momentum, we see these occupancies going up,” said Raffi Krikorian, managing regional partner in the Encino office of Sperry Van Ness. Valley apartment vacancies either held steady or dropped in every month since the middle of last year, going from 10.4 percent in May 1996 to the current 9.3 percent. Submarkets with the lowest vacancy rates as of December included Encino-Tarzana (6.0 percent), Sherman Oaks-Studio City (6.2 percent) and North Hollywood (8.0 percent). The weakest submarkets were in areas hit hardest by the Northridge earthquake of 1994, including Reseda-West Van Nuys (14.4 percent), Northridge (12.9 percent) and Mission Hills-Panorama City (11.9 percent). Zeke Logan, a senior associate with brokerage firm Lee & Associates of Sherman Oaks, said that Valley apartment vacancies could drop as low as 6 percent before the decreases taper off. The falling vacancy rates have already caused rents to level off in many Valley submarkets and rents could even start to rise in the strongest submarkets as early as mid-1997, said Logan and Krikorian. Rising rents and falling vacancies could start to push up building prices, which ultimately would result in a sellers’ market for the first time in five years, Krikorian said. Areas where rents have firmed up include Sherman Oaks, Woodland Hills, Studio City, Tarzana and Encino. The move to a sellers’ market could even spark the first development of new Valley apartment buildings in recent years, Krikorian said. “At this point in time, you can buy buildings at or below replacement cost, so new construction isn’t justified. But we could see some new construction beginning as early as the end of this year” if building prices and rents rise, he said. Douglas Young
