I. Executive Summary
The Costa Mesa rental market remains robust and highly competitive, characterized by low vacancy rates and persistent demand fueled by the city’s strategic location and strong local economy. Rental prices continue to see modest annual growth, tracking above the broader Orange County (OC) average. The market’s high cost of homeownership and influx of professional renters solidify Costa Mesa as a premium Orange County submarket.
| Unit Type | Average Monthly Rent (Approximate Range) | Annual Rent Growth (Y-o-Y) | Vacancy Rate (Submarket) |
|---|---|---|---|
| All Units | $2,850 – $3,300 | 1.2% – 2.8% | 3.7% |
| 1 Bedroom | $2,500 – $2,700 | (Included in All Units) | (Included in All Units) |
| 2 Bedroom | $3,000 – $3,200 | (Included in All Units) | (Included in All Units) |
II. Current Market Snapshot
Costa Mesa’s average rent is significantly higher than the national average, reflecting its status as a desirable coastal-adjacent Orange County city with direct access to major employment hubs.
A. Average Asking Rents by Unit Type
Below is a detailed breakdown of approximate average rents based on current market listings, generally reflecting Class A and B multifamily properties.
| Unit Type | Average Square Footage | Approximate Average Monthly Rent |
|---|---|---|
| Studio | 475 sq. ft. | $2,100 |
| 1 Bedroom | 700 sq. ft. | $2,600 |
| 2 Bedroom | 1,000 sq. ft. | $3,100 |
| 3 Bedroom | 1,250 sq. ft. | $3,400 – $3,550 |
| Single-Family Home (3-Bed) | N/A | $5,471 |
Note: Pricing is sensitive to neighborhood (e.g., Eastside Costa Mesa and the Theatre Arts District often command higher prices) and property vintage/amenities.
B. Vacancy and Absorption
The Costa Mesa submarket demonstrates stronger fundamentals than the overall Orange County multifamily market.
- Submarket Vacancy Rate: The vacancy rate is currently estimated around 3.7%, which is low and signals a tight landlord-favorable market.
- Recent Supply Impact: The vacancy rate recently stabilized after a temporary spike attributed to the delivery of a new, large (approx. 200-unit) Class A complex. Net absorption has since returned to positive territory, indicating strong tenant demand for new inventory.
III. Market Trends and Dynamics
The market is showing resilience and renewed upward momentum in rental pricing after a period of moderation in 2022-2023.
A. Rent Growth
Annual rent growth is trending positively, averaging between 1.2% and 2.8% year-over-year. While this is modest compared to the high-growth phase of 2021, it demonstrates consistent demand that outpaces inflation in the housing sector. Rents are expected to continue this gradual rise, supported by low supply and consistent economic activity in the region.
B. Development Pipeline
New multifamily construction within the Costa Mesa submarket remains limited, which helps maintain low vacancy and upward pressure on existing rental stock. While the broader Orange County market is seeing some large-scale deliveries (especially in the Irvine area), the immediate Costa Mesa area relies heavily on positive absorption of recently completed projects and maintenance of its existing inventory.
IV. Key Market Drivers
The sustained demand and premium pricing in Costa Mesa are driven by several distinct economic and demographic factors:
- Strategic Location and Economic Hub: Costa Mesa is highly desirable due to its proximity to the region’s largest employers and commercial centers, including the Irvine Business Complex and the South Coast Plaza retail/office hub. This attracts a professional, highly educated workforce 40% of renters hold a bachelor’s degree or higher) willing to pay a premium for a central commute and vibrant lifestyle.
- Housing Affordability Barrier: With Orange County experiencing some of the highest home prices in the U.S., homeownership remains unattainable for a large portion of the working population. This continuous pressure pushes would-be buyers into the rental market, maintaining strong demand for high-quality, high-end rental units.
- Vibrant Lifestyle: The city’s cultural assets (like the Segerstrom Center for the Arts) and its active dining and retail scene contribute to its appeal, driving demand from renters who prioritize quality of life and convenience.
- High Density/Limited Space: Costa Mesa is a densely populated city, creating a perceived and actual scarcity of housing units, which inherently contributes to the elevated rental costs.
V. Outlook
The Costa Mesa rental market is forecasted to remain tight and landlord-favorable through the remainder of 2024 and into 2025. Vacancy is expected to decrease further as new units are absorbed, and rents are projected to continue their upward trajectory, likely posting an annual increase near the 2% to 3% range. The primary risk to this forecast would be a significant economic downturn impacting employment in Orange County’s service and professional sectors, or a dramatic increase in new housing supply which is not currently anticipated in the immediate submarket.
Kurt Galitski- Principal, Broker
(949) 688 7705 | DRE #: 01348644
2919 Newport Blvd, Newport Beach, CA 92663
DISCLAIMER: This article is for informational and educational purposes only and is based on publicly available data from official state and county sources. We are NOT tax professionals, financial advisors, CPAs, or attorneys. The information provided does not constitute legal, tax, or financial advice.