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REGIONAL SPOTLIGHT: San Diego Sales Slow, but Market is Healthy

SAN DIEGO-The credit crunch has caused investors to alter their strategies, and that has impacted sales volume.

By Sule Aygoren Carranza | Updated on May 23, 2008

SAN DIEGO-When it comes to strategy, most apartment owners in the San Diego area are preferring to hold their assets as investments, according to a recent study from Cushman & Wakefield. Just 93 assets changed hands in the first three months of the year, accounting for 1,459 units. This represents the fourth time in 26 years that the number of properties traded has dipped into the double digits. The other three are the third quarter of 1992, with 98 deals; the first quarter of 1993, with 96 assets sold; and the first quarter of 2007, with 87 transactions.

“Though the 93 first-quarter sales transactions is up slightly from 87 transactions in the first quarter of 2007, the slower double-digit activity reflects the continuing disparity in prices between what cautious investors want to pay and the value existing owners continue to see in their properties,” said George Carlson, associate director and apartment specialist with Cushman & Wakefield San Diego. The number of apartment units sold between January and March is also down 48.9% from the 2,854 units that traded in the first quarter of last year, and marks the lowest units, of units sold in a quarter since 1992, when 1,352 units changed hands.

Overall, C&W states that multifamily assets in San Diego County are well positioned given the high barriers to entry and little new construction. There were just 2,490 new unit additions to the area in 2007 and only 1,290 units are slated to hit the market this year, the firm reports, citing data from MarketPointe Realty Advisors. Further, vacancy as of the first quarter was just 3.6%, while rents rose nearly 4% over the year to $1,311 a unit. This, says the firm, continues to support the hold strategy of many existing owners.

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