LOS ANGELES APARTMENT MARKET
POISED FOR IMPROVEMENT

LOS ANGELES, Feb. 5, 2010 – Following two years of deep employment contractions, employers are expected to expand payrolls minimally in Los Angeles County in 2010, according to the 2010 National Apartment Report by Marcus & Millichap, the nation’s largest real estate investment services firm. Cuts will continue in the retail and construction sectors, however, which will push vacancy higher, particularly in the San Fernando Valley.

“Investment activity in Los Angeles County gained momentum during the fourth quarter of last year as buyers sought to acquire institutional grade assets that rarely change hands,” says Stephen Stein, regional manager of Marcus & Millichap’s Los Angeles office.

Following are some of the most significant aspects of the Los Angeles Apartment Research Report:

• The local employment market is expected to remain soft in the first few months of 2010 before stabilizing in the second half. Following a loss of 115,000 jobs in 2009, payrolls are forecast to expand by 0.3 percent this year, with the addition of 13,000 positions.
• Rental completions will slow to 1,550 units in 2010, a 0.2 percent addition to inventory. Approximately 800 apartments are expected to come online in the San Fernando Valley.
• Vacancy is forecast to tick up 20 basis points this year to 6 percent in response to ongoing stock additions.
• Lingering high unemployment will continue to pressure owners to lower rents. Asking rents are expected to fall to $1,335 per month in 2010, while effective rents will slip to $1,263 per month, respective declines of 2.8 percent and 3.6 percent annually.

Also included in the report is the firm’s annual National Apartment Index (NAI), a snapshot analysis that ranks 44 apartment markets based on a series of 12-month forward-looking supply and demand indicators. Los Angeles moves up two places this year to No. 13. Washington, D.C., retained the top spot in the NAI for the second consecutive year, as ongoing government spending will fuel metrowide hiring and apartment demand. San Diego, No. 2, rose four places due to expectations for resumed employment and household growth. New York City, which ended 2009 as the tightest apartment market in the country, jumped five places in the index to No 3. Despite tight vacancy, rents in Minneapolis-St. Paul, No. 4, continue to contract, causing the market to slip one spot this year. Job growth in Philadelphia will lag the nation in 2010, easing the metro down three places to round out the top five.

For a copy of Marcus & Millichap’s National Apartment Report and the complete NAI rankings, visit www.MarcusMillichap.com.

With more than 1,200 investment professionals in offices nationwide, Marcus & Millichap Real Estate Investment Services is the largest firm specializing in commercial real estate investment services in the nation. Marcus & Millichap closed 3,441 transactions in 2009, the highest of any commercial real estate brokerage firm. Founded in 1971, the firm has perfected a powerful system for marketing properties that combines product specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology and relationships with the largest pool of qualified investors nationally.

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