REAL ESTATE

Break for Landlords: The next 10 years will see a “severe” downturn in apartment construction, says a local broker, in what could be good news for landlords faced with stiff competition and low rents.

A wave of apartment construction since the mid-1980s means there are dozens of apartment complexes out there competing for tenants. So landlords have to lower the rent and offer inducements like a month’s free rent to get tenants in the door. It’s a far cry from the 1970s, when rents sometimes jumped 15% a year.

But that could be changing, says Raymond W. Eldridge III, a Coldwell Banker broker in Anaheim. It’s hard to borrow money to build apartments these days, and land with government entitlements to build apartments in north Orange County is “almost nonexistent,” Eldridge said in a recent report.

Building permits for apartments have already dropped sharply in the county from a peak in 1986, when local governments issued permits for 12,285 units. They totaled only 8,556 last year.

The average rent, incidentally, was $773 a month.

“When compared to neighboring Long Beach or Westside Los Angeles, Orange County rents remain a bargain,” Eldridge wrote. “As Orange County plays catch-up, many experts speak of substantial rental increases in the early ‘90s.”