Limited Supply Spurs San Diego Apartment Prices

SAN DIEGO-The most recent Apartment Research Report released by Marcus & Millichap reveals an already strong and still strengthening apartment sector in the metro area market. According to the report, a growing job market “strong net in-migration and skyrocketing home prices” are placing San Diego “on track to post solid gains in sales, rents and occupancy this year.” Kent R. Williams, first vice president and regional manager of Marcus & Millichap’s local office, says there are key indicators to the sectors solid fundamentals.”San Diego’s economy is gaining momentum as almost all industries have increased their hiring,” says Williams. “Strong job growth has translated into high tenant demand for apartments this year and has kept San Diego’s rental market among the top performers in the nation.”Chief among job growth industries are the service and construction sectors, according to the report. The service industries have experienced 9,800 new jobs over the last year, while construction has seen 8,500 jobs created. Another sector that’s on the rise is the leisure and hospitality industry, where 9,600 jobs have been added since the start of the year. Overall, the report says “employment growth is expected to reach 2.3 percent this year, with employers on track to add a total of 29,000 positions.” On the construction side, new apartment development is off 27% from the previous year with only 3,000 units on tap for this year. One bright spot in construction is the building of condos. “The condominium market continues to yield higher profits than apartments on a per-unit basis,” according to the report.On tap are new projects that are in the Mission Valley area of Downtown. Two projects there will count nearly 1,400 new units to the area. One other area that’s a hot submarket is Carlsbad where some 700 units are set for completion this year.The skyrocketing home prices are one of the main reasons for the increased demand in apartments, with the affordability rate down to 10 %. But rental rates are strong, too, with the average asking rent rates expected to hit $1,165 per month by the end of the year.