The Top Apt. Market in DT San Diego

520 W. Ash St. benefits from being close to the harbor.

SAN DIEGO—The Little Italy submarket of Downtown San Diego , with its proximity to the harbor and old-world feel, is seeing the highest apartment rental rates in the Downtown market, Colliers International broker Victor Krebs tells GlobeSt.com. After the firm represented buyer Lennar Multifamily Communities LLC in an off-market transaction involving the sale of 520 Ash St. , a high-rise apartment development in Little Italy, we spoke exclusively with Krebs about the submarket, why it’s so attractive to renters and why rental rates are so strong here. GlobeSt.com: Please describe the Little Italy submarket for apartments. Krebs: We recently sold a property at 520 Ash St., as well as another down there at the end of last year, to Lennar’s multifamily division. Because it’s very near the harbor—the main drag is only a few blocks off San Diego Bay—the breezes come in right off the bay, and there’s a real connection to the water. Because of its proximity to the harbor and its connection to and history with the water, that gives the community a unique and distinctive feel. India St. has historically had restaurants and shops, and as the area has redeveloped , new restaurants and shops have come in and added to the neighborhood ambiance. Like most mature communities, there’s not a lot of developable land in the market, but there are a few sites left—only a handful of larger ones, one of which we have listed now at 445 Ash on Ash and Columbia. Last cycle, there were apartments and condos; we’ve sold about 20 sites in Little Italy between the last cycle and this one.

Krebs: “Because it was an established neighborhood going back to the turn of the century and to the 1920s, there’s a real sense of community about Little Italy.”

GlobeSt.com: What draws tenants to this submarket of Downtown? Krebs: Because it was an established neighborhood going back to the turn of the century and to the 1920s, there’s a real sense of community about it. It’s centered on the waterfront, and there’s something about its connection to the water. There’s a walkability to it and a great sense of history, enhanced by all of the new restaurants and shops that have come in over the last 20 to 26 years. GlobeSt.com: How does the apartment market compare to the condo market in this region? Krebs: Most markets in Southern California have not seen a lot of condo development this cycle. The majority has been apartments by far. Par to it is that equity and debt have been much more interested in apartment development vs. condominiums. They’re getting such high prices to exit out of it when they complete the building; there’s not a lot of extra spread for doing condos and taking additional risk so far. If condo pricing starts to outstrip it, that would change. There hasn’t been enough margin for converters because of the prices new class-A apartments are selling for. GlobeSt.com: What else should our readers know about Little Italy? Krebs: Little Italy is the top leasing market in Downtown San Diego in terms of rental rates.  It’s well received and a neat little community.