Scepanovic: The San Diego urban-apartmet market is relatively young and relatively small. If you look at other major markets like San Francisco, Boston, Chicago, L.A.—they have huge urban areas. San Diego's is really the Downtown area and surrounding neighborhoods and on a scale, is relatively small. I would describe it as a newer experience as these outlying areas begin urbanizing and gentrifying more. That's the distinction. Also, this market is basically on the water and in close proximity to the Bay, which is a unique feature that's helpful. In addition to that, you've got certain parts of San Diego where you have mid-rise and high-rise buildings, like the East Village down by the Bay and other neighborhoods—Bankers Hill, Little Italy, North Park, Mission Hills—that are relatively low-rise, walkable urban areas, walkable. That's what's really positive about the San Diego urban experience: it's expansive and livable, not wall-to-wall 12-story buildings.

GlobeSt.com: What advantages does San Diego's urban apartment market have over other markets?

Scepanovic: Size and scale are super big plus, instead of sprawling urban area that's massive, have smaller area and within that have neighborhoods that are very unique and specific—NP different from little Italy and EV, in terms of features there and attractions nearby, etc. that's what makes the SD urban experience special. if you want to use a term. I happen to think SD as a whole is special, roughly 3M population in the county, so SD in itself compared to other cities is smaller. gives it its unique character. continues on same theme as urban environment.

GlobeSt.com: What are the challenges for apartment owners in this market?

Scepanovic: If you look at the urban environment, it is smaller, and that means there isn't as much product at any given time. It's not as easy to find product if you're an owner looking for opportunities. Also, it's not as easy to find suitable properties for renovation and redevelopment, and while there's quite a bit of that going on in that urban area of North Park, opportunities to find suitable properties that make sense that you can fully renovate and make fully attractive aren't as plentiful. From a developer's standpoint, in the portfolio we just sold, the buyer will renovate the property to make it livable, attractive, urban looking, etc., so that's an example. Buyers in other markets would like to buy in San Diego and actively look for opportunities down here, but they're not as plentiful because of the size of our market.

GlobeSt.com: What else should our readers know about the San Diego urban-apartment market?

Scepanovic: The good thing about our market is in general we have historically low vacancy rates throughout the county, and we don't have as big a new supply coming on line as other markets. We do have supply coming online in the Downtown area, primarily in the East Village area where you can have a little bit of scale; but in general, it's a good market to look for opportunities to create value by infusing a lot of renovation and repositioning of older properties. Many of these 50-to-60-year-old properties are ready for an upgrade, and the urban area that includes Downtown and all the areas we discussed has a lot of properties from the '30s, '50s and '60s that are ready for someone to come in and upgrade and renovate. It's an area that's upgrading simply because the housing stock is pretty old.

SAN DIEGO—The size and youth of the San Diego urban-apartment market, along with San Diego County's neighborhood-conscious residents, provide singular opportunities for apartment investors—if they can find them, Colliers International SVP and leader, multifamily advisory group, Peter Scepanovic tells GlobeSt.com. Scepanovic and Colliers' Corey McHenry recently represented the buyer, a San Diego-based private investor, in the sale of a three-property, 35-unit apartment portfolio located in San Diego's North Park and University Heights neighborhoods for $8.7 million. The three properties total 24,064 square feet and are located at 4366-72 and 4374-80 Mississippi St., 3744 Bancroft St. and 4534-40 30^th St.

According to Scepanovic, “This was a generational sale of a family-owned apartment portfolio to an investor who plans to reposition the properties in the market. As demand and property values remain strong for urban apartments, we will continue to see this trend.”

We spoke with Scepanovic about the nature of San Diego's urban-apartment market and how it's different from other nearby markets.

GlobeSt.com: What makes San Diego's urban apartments stand out from urban apartments in other markets?

Scepanovic: The San Diego urban-apartmet market is relatively young and relatively small. If you look at other major markets like San Francisco, Boston, Chicago, L.A.—they have huge urban areas. San Diego's is really the Downtown area and surrounding neighborhoods and on a scale, is relatively small. I would describe it as a newer experience as these outlying areas begin urbanizing and gentrifying more. That's the distinction. Also, this market is basically on the water and in close proximity to the Bay, which is a unique feature that's helpful. In addition to that, you've got certain parts of San Diego where you have mid-rise and high-rise buildings, like the East Village down by the Bay and other neighborhoods—Bankers Hill, Little Italy, North Park, Mission Hills—that are relatively low-rise, walkable urban areas, walkable. That's what's really positive about the San Diego urban experience: it's expansive and livable, not wall-to-wall 12-story buildings.

GlobeSt.com: What advantages does San Diego's urban apartment market have over other markets?

Scepanovic: Size and scale are super big plus, instead of sprawling urban area that's massive, have smaller area and within that have neighborhoods that are very unique and specific—NP different from little Italy and EV, in terms of features there and attractions nearby, etc. that's what makes the SD urban experience special. if you want to use a term. I happen to think SD as a whole is special, roughly 3M population in the county, so SD in itself compared to other cities is smaller. gives it its unique character. continues on same theme as urban environment.

GlobeSt.com: What are the challenges for apartment owners in this market?

Scepanovic: If you look at the urban environment, it is smaller, and that means there isn't as much product at any given time. It's not as easy to find product if you're an owner looking for opportunities. Also, it's not as easy to find suitable properties for renovation and redevelopment, and while there's quite a bit of that going on in that urban area of North Park, opportunities to find suitable properties that make sense that you can fully renovate and make fully attractive aren't as plentiful. From a developer's standpoint, in the portfolio we just sold, the buyer will renovate the property to make it livable, attractive, urban looking, etc., so that's an example. Buyers in other markets would like to buy in San Diego and actively look for opportunities down here, but they're not as plentiful because of the size of our market.

GlobeSt.com: What else should our readers know about the San Diego urban-apartment market?

Scepanovic: The good thing about our market is in general we have historically low vacancy rates throughout the county, and we don't have as big a new supply coming on line as other markets. We do have supply coming online in the Downtown area, primarily in the East Village area where you can have a little bit of scale; but in general, it's a good market to look for opportunities to create value by infusing a lot of renovation and repositioning of older properties. Many of these 50-to-60-year-old properties are ready for an upgrade, and the urban area that includes Downtown and all the areas we discussed has a lot of properties from the '30s, '50s and '60s that are ready for someone to come in and upgrade and renovate. It's an area that's upgrading simply because the housing stock is pretty old.