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The Mickey Mouse Effect on Anaheim’s Apartment Market

Disneyland Jobs Help Drive Anaheim Rent Growth

By Louis Rosenthal | Tuesday, July 25, 2017


disneyland jobs

Disneyland is a magical place for children of all ages – and Disneyland jobs are a prime driver of the market for Anaheim apartments.

Anaheim’s overall job market showed some signs of life in June, with about 19,000 new jobs added over the last year, bringing the annual job growth rate up to 1.2% -- following two consecutive months of nearly flat gains. This is a significant moderation since mid- to late 2015, when job growth in Anaheim reached as high as 3.6%.

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However, troubles in the job market have not (yet) translated into lower apartment rent growth rates for the Orange County metro division. Effective rents increased by a strong 4.2% in June, up from the 3.4% rent growth posted in May, according to Axiometrics apartment rental data. In fact, Anaheim’s June performance soundly beat the national average (2.5%) and the Los Angeles metro division (3.7%).

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Most people associate Anaheim with Disneyland, its top employer and a significant source of Anaheim’s economic activity. In fact, the Disney parks and resorts employ about 27,000 people and is estimated to generate roughly $5.5 billion a year for the area. From a demand-side perspective, Disney is a significant driver of Anaheim’s apartment market. As such, changes at the resort and theme park — whether that be employment levels, new attractions or changes in attendance levels — should affect apartment performance.

In terms of attendance, 2016 was an anomaly of sorts for the park, with the number of visitors falling by 2% compared to the year prior. This is second annual decline in attendance for the resort since the Great Recession, and the steepest decline since 2001.

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However, declining attendance affected almost every single Disney property around the world, though, according to a report in “The New York Times,” part of this decline was engineered through higher prices in order to control over-crowded parks. Additionally, 2016 was a disappointment only by the standard set in 2015 when a record number of Anaheim visitors attended Disneyland. And considering that a new “Star Wars”-themed park is set to open this year, Disney will be in fine shape in the near-term.

Nevertheless, there are certainly challenges facing the Anaheim apartment market. As mentioned earlier, job growth was virtually flat in May, which was partially driven by eight consecutive months of negative growth among amusement and recreation employees — the category that includes Disneyland jobs.

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We can isolate the impact of Disney-related issues on the broader labor market in Anaheim by comparing amusement and recreation employment growth against the broader category of leisure and hospitality employment growth. Leisure and hospitality is growing at a similar pace as total job gains, while amusement and recreation growth has cratered.

To further illustrate the interconnections between theme-park-related employment and Anaheim’s apartment market, consider the relationship between rent growth across all apartments located within three miles of the Disney resort and amusement/recreation job growth. Both indicators peaked in September 2016 before beginning their steep slide all the way through the present, according to apartment rental reports.

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But there are broader issues facing Anaheim’s economy and housing market. For one, putting aside the number of jobs lost or added in amusement and recreation in a given month, most of the theme park-related jobs only pay about $23,000 a year (roughly half the average salary for Anaheim’s residents). Considering that the average apartment rent in Anaheim in June was a little over $2,000, most theme park employees are simply priced out of the conventional apartment market.

So far, this discussion has focused on the demand- side of the Anaheim apartment market, but the supply side is equally as important. In that case, new supply is projected to peak this year with almost 7,000 new apartment units scheduled for delivery — a 2.4% inventory growth rate compared to 2016.

In the coming months, if job growth remains flat—or even goes negative—then Anaheim apartments will face a serious challenge absorbing all the new units hitting the market this year. However, the Axiometrics forecast anticipates a few more years of rental growth rates above 3% -- a testament to the underlying strength of demand for apartments in Anaheim.

In the end, while Disneyland is a significant demand-driver in the Anaheim metro division, it is not the only one. Tourism in Anaheim is booming regardless of a single-year dip in Disneyland attendance. This means more economic growth for the area, which can only be good for apartments and the housing market, generally. The more that Anaheim diversifies away from Disney and continues to become a destination for business and leisure in its own right, the more likely it is to weather any single-year increase in new supply or decrease in job growth.



Louis Rosenthal

Louis Rosenthal

Real Estate Analyst

Louis Rosenthal researches and analyzes current apartment trends in the United States and correlates them with economic indicators. He also studies the urban landscape and other metrics to develop in-depth reports and presentations for clients. Louis recently earned his Master of Science in Public Policy, focusing on housing, landuse patterns, real-estate dynamics and economic development. He combines that knowledge with his four years of practical experience in tax analysis, regression analysis and presentations to develop insightful analysis. An accomplished writer, Louis’ work has appeared on and Axiometrics’ blogs, among others.

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