The bottom is near -- yet so far -- for Inland Empire apartments, report says

Apartment occupancy and rents in the Inland Empire will continue to fall this year before recovering in 2011 and 2012, commercial real estate brokerage Marcus & Millichap said in a report Thursday. 

The bottom is near for what has been a very punishing market for landlords, the report said. Riverside and San Bernardino counties were hit especially hard by the recession in part because residential and commercial real estate was over built during the boom years of the 2000s. Empty single-family homes for rent have added a competitive burden for apartment landlords.

The area is expected to have its first gain in net employment since 2006 this year, and construction of new units has been considerably curtailed. A few neighborhoods closest to Los Angeles and Orange counties will even see an increase in occupancy this year, the report said.

Overall, though, average effective rents will fall another 4% this year to $909 per month on top of a 7% fall last year. Vacancy will rise slightly to 8.5%.

Bank-owned and distressed apartment properties have started to hit the market and more are expected to follow, Marcus & Millichap said. Recent sales have begun to set a price floor and speed up the number of apartment buildings coming up for sale.

-- Roger Vincent

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