SAN DIEGO-“Sales volume continues to be limited in the Southern California marketplace due to a lack of sellers and a plethora of buyers, resulting in high demand and prices.” We recently touched base with Real Estate Forum top broker team Dixie Hall, first vice president of CBRE San Diego, along with Kevin Mulhern, SVP and Rachel Parsons, senior associate, on their thoughts on the San Diego market.
According to the team, cap rates are anticipated to remain level near the low 4% range in the A class properties, with continued downward pressure on cap rates for B and C class assets. This is “due to the low interest rate environment and lucrative cash on cash returns achievable in this product type—particularly with value-add opportunities,” the team says.
Rental demand and rates are expected to grow as the employment market continues to recover and more jobs are created, the team points out.
“New development remains the buzz word in Southern California apartments. There is plenty of demand for new deliveries and isolated submarkets may see concessions and occupancy dips for the short term. Overall the absorption rate should be strong as renters by choice are eager for new product.”
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