Apartment rents in Los Angeles are projected to increase moderately in the next two years even as vacancies rise, according to a report released Wednesday by USC’s Lusk Center for Real Estate.

The 2012 Casden Multifamily Forecast predicts average rents in the county will increase 7.9 percent to $2 a square foot in this year, and 9.6 percent to $2.04 a square foot by the end of next year. Vacancies are expected to rise slightly, with increases continuing next year as rent growth slows.

The annual Casden study, which analyzes apartment markets in Los Angeles, Orange, and San Diego counties and the Inland Empire, showed across-the-board increases in rents and vacancy rates in the region. The improvement was strongest in Los Angeles and San Diego.

The report notes that renters have been moving out of the so-called shadow market – rentals of single-family homes, townhouses, and condos – and into traditional apartment complexes.

“A sharp drop in new construction, the dwindling supply of shadow-market units, and improvements in the macro-economy have strengthened fundamentals on both the supply and demand side,” forecast author Tracey Seslen said in a statement. “This is boosting asking rents, reducing or eliminating concessions, and filling units.”

The number of new apartments coming on the market in Los Angeles decreased 53 percent to 2,483 units last year, and is expected to stay near that level this year. But the economy could put a damper on the multifamily market, the study warns. While 35,000 to 40,000 jobs are expected to be created this year, the county’s unemployment rate has remained at 11.8 percent in February. In addition, falling home prices may prompt more creditworthy renters to buy homes.