Los Angeles County leads regional performance with 4.5 percent revenue growth as occupancy improves across all SoCal markets
Essex Property Trust’s Southern California portfolio posted same-property revenue growth of 3.8 percent in the fourth quarter of 2025, matching the company’s overall portfolio performance as improved occupancy offset moderate rent growth across the region’s four major markets.
The San Mateo-based real estate investment trust reported net operating income growth of 2.9 percent for Southern California in the fourth quarter, with the region accounting for 41.5 percent of total consolidated net operating income. Essex’s 23,598 consolidated apartment homes in Southern California commanded an average monthly rent of $2,696, up 1.6 percent from $2,654 a year earlier.
Los Angeles County delivered the region’s strongest performance with revenue growth of 4.5 percent in the fourth quarter, driven by improved occupancy and steady rent increases. The county accounted for 17.2 percent of Essex’s total net operating income, with 9,288 apartment homes generating average monthly rents of $2,697, up from $2,665 in the prior-year period.
Financial occupancy across Los Angeles County properties reached 96.1 percent in the fourth quarter, up significantly from 95.1 percent a year earlier, representing a full percentage point improvement that contributed meaningfully to revenue growth. The occupancy gain reflected strong leasing momentum in the nation’s second-largest multifamily market.
Orange County posted revenue growth of 4.3 percent in the fourth quarter, with Essex’s 4,523 apartment homes there commanding average monthly rents of $2,750. The coastal market contributed 9.8 percent of the company’s net operating income and maintained financial occupancy of 96.8 percent, up from 96.0 percent year-over-year.
San Diego County revenue increased 2.1 percent in the fourth quarter, the slowest growth among Southern California markets but still positive. The company’s 4,588 San Diego apartment homes averaged $2,729 in monthly rent and maintained 96.3 percent occupancy. Ventura County, Essex’s smallest Southern California market with 2,255 apartment homes, grew revenue 3.5 percent.
For the full year 2025, Southern California revenue growth reached 3.3 percent, matching the company’s overall same-property portfolio. Net operating income grew 2.4 percent for the year, lagging the revenue growth rate due to operating expense increases of 5.4 percent, the highest among Essex’s three major regions.
The elevated expense growth reflected higher property taxes, utilities, and insurance costs in California markets. Fourth-quarter operating expenses in Southern California rose 5.9 percent year-over-year, also the highest regional increase, pressuring net operating income margins despite solid revenue performance.
Essex made two significant dispositions in Southern California during 2025 while directing all acquisition capital to Northern California markets. In February, the company sold Highridge, a 255-unit community in Rancho Palos Verdes built in 1972, for $127 million, or $498,000 per unit. The sale represented an exit from an aging coastal asset.
The company’s largest Southern California transaction was the April sale of Essex Skyline, a 350-unit high-rise in Santa Ana built in 2008, for $239.6 million to Crescent Heights. The sale price of $685,000 per unit reflected the property’s modern construction and Orange County location. The dispositions generated $366.6 million in total proceeds.
The sales reflected Essex’s strategy of recycling capital from Southern California into what management views as higher-growth Bay Area markets with tighter supply constraints. All seven of the company’s 2025 acquisitions totaling $829.4 million were located in Northern California.
Supply dynamics in Southern California remain relatively stable. The region is projected to see 26,000 multifamily units delivered in 2026, representing 0.4 percent of existing stock, according to Essex’s forecast. This compares to 28,200 units delivered in 2025, also 0.4 percent of stock.
Los Angeles County is expected to see 12,100 units delivered in 2026, down from 14,900 in 2025. Orange County supply is projected to increase slightly to 5,200 units from 4,400, while San Diego County deliveries should decline to 7,700 units from 8,000. Ventura County is forecast to see 1,000 units delivered, up from 900 in 2025.
Components driving Southern California’s fourth-quarter revenue growth included 2.2 percent from scheduled rents and 0.7 percent from improved delinquency. Vacancy contributed 0.3 percent, while other income added 0.6 percent. Concessions were flat year-over-year. On a sequential basis, Southern California revenue increased 1.1 percent from the third quarter.
Essex Property Trust reported companywide Core Funds From Operations of $3.98 per diluted share in the fourth quarter, up 1.5 percent year-over-year, and $15.94 for the full year, up 2.2 percent. Southern California’s solid performance contributed to results that exceeded the midpoint of the company’s original 2025 guidance.
The company’s 2026 guidance calls for same-property revenue growth of 1.7 to 3.1 percent on a cash basis across its entire portfolio, with a midpoint of 2.4 percent. Blended lease rate growth expectations of 2.0 to 3.0 percent should support continued revenue expansion in Southern California markets.
Same-property net effective rate growth in Southern California showed new leases down 2.4 percent and renewals up 4.8 percent in the fourth quarter, resulting in blended growth of 1.9 percent. The renewal strength offset weakness in new lease rates as the market absorbed recent supply.
Essex maintained over $1.7 billion in immediately available liquidity at year-end and investment-grade credit ratings of Baa1 from Moody’s and BBB-plus from Standard & Poor’s. The company’s Southern California portfolio remains its largest regional concentration by unit count and net operating income contribution.
While the company’s strategic focus has shifted toward Northern California markets with tighter supply dynamics, Southern California continues to deliver steady growth supported by the region’s diverse economy, limited new construction relative to population, and strong long-term demographic trends.
