Local Apartment Market Remains Tight

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SAN DIEGO-With industry insiders releasing data that the local condo market has been overbuilt, it could be just the news some holders of apartment property were looking for. A Marcus & Millichap study reveals that San Diego ranks No. 4 among 42 apartment markets nationally. While the local market remains strong, its position on the list is a drop off from last year’s No. 2 ranking.As part of Marcus & Millichap’s National Apartment Research Report for 2006, the firm based its findings on 12-month forward-looking supply and demand indicators, and points to San Diego benefiting from tight vacancy and strong rent growth.”The San Diego apartment market will continue to be a top performer in 2006,” says Kent R. Williams, first vice president of Marcus & Millichap and regional manager of the San Diego office. “San Diego’s healthy apartment market fundamentals will support prices over the next year, and the long-term investment outlook remains bright.”Williams says that particular San Diego submarkets will be worth tracking. “Buyers looking for more affordable options or upside opportunities will likely seek properties in the southern and eastern parts of the county,” he adds. Chula Vista, particularly the area east of I-805, and San Marcos are two of the submarkets where new commercial development is helping build interest for potential residents, according to the report.The report says rents in the county are expected to go up 4.6% this year to an average of $1,263 per month. Also, vacancy rates are expected to drop 30 basis points to 3.2% by year’s end.Although apartment reports are strengthening, the condo market is not drying up. Last week, Construction Services Inc. purchased a retail building on 15,000 sf of land for $6 million. The site is located at 1515 Fourth Ave. Downtown and the buyer plans to use the land for a condominium development.Bill Shrader of Burnham’s Urban Retail Group represented Construction Services Inc. Brad Thornberg represented the seller, Hartung Family Trust.