"Population density more than twice the national average makes California a logical choice for urban residential development," says Joseph Clements of M/PF. "Across the state the stock of existing housing is relatively small compared to the number of resident prospects who work in and around downtown areas. However, getting new projects out of the ground is a struggle, due to limited site availability and very high development costs. In turn, these new properties command sizable rents and sales prices that make affordability a challenge for many households."

Currently, the largest urban apartment community under construction in a California urban area is the Paramount, which is being built in San Francisco's SOMA neighborhood. The 43-story building features 486 apartments. In addition, two properties that are being developed at the 303-acre Mission Bay redevelopment project will bring a combined total of 350 apartments to the market. Mission Bay will also include a new San Francisco Giants baseball park, a 43-acre research campus for UCSF, and significant blocks of office and retail space.

The research report also shows that nearly 900 apartments are being built in Intown San Jose, and nearly 600 units are in process in Intown Oakland.