We spoke with Rosen about the significance of this transaction and what it indicates about San Diego's changing dynamics.

GlobeSt.com: What was significant for you about the Pacific Ridge sale?

Rosen: There was a lot of demand from investors—private as well as institutional—so, the size of the transaction if anything increased the amount of interest for the asset. At this particular time, overall there's a tremendous amount of equity out there, and because of that it's a good opportunity to sell very large real estate deals.

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GlobeSt.com: What does this sale indicate about the San Diego region's changing dynamics?

Rosen: Our quality of life, proximity to the beach for all the recreational benefits, as well as climate benefits mean tenants continue to commit more of their income to rent proportionately to other areas because they like living in San Diego. There have been nicer communities built, but there's still a shortage of rental housing here, and it's created a premium in rents for newer-constructed assets that are at the same time well located.

GlobeSt.com: Where do you see the San Diego multifamily investment market headed in the future?

Rosen: There's am environment here of a low-trading market, which means properties don't trade very often because of barriers of entry to get into the market. There's a lack of new construction, and investors who are in it for the long run create very few opportunities for new investors to get in. It's very stable. There are more renters than single-family homes; the affordability of single-family homes is the issue. In order to live here, people will be renters, whereas elsewhere they could be home owners. But they will compromise homeownership to be able to live the quality of life San Diego offers. There's such a shortage of housing to begin with that interest rates may change, and that may affect the value of the apartments in the future, but the rental stream of income is very durable and there's not a lot of risk of volatility. That's one of the biggest attractions, from an investor's point of view, of owning in this market. It's the best risk-adjusted return in real estate.

GlobeSt.com: As the San Diego apartment market gets bid up, what are you noticing about the types of investors seeking to buy here?

Rosen: It's apparent that there's an abundance of equity available in all the different areas of buyers in the market, from syndicators to private parties to institutional players.

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SAN DIEGO—The $232-million sale of Pacific Ridge, a 533-unit luxury community here, shows how desirable multifamily properties are in a market where asking rents are up nearly 5% from a year ago, Berkadia managing director Ed Rosen tells GlobeSt.com. Rosen and managing director John Chu, along with directors Kyle Pinkalla and Erin Dammen, completed the property's sale—one of San Diego County's largest apartment transactions to date—on behalf of a San Francisco-based entity to American Assets Trust Inc., a San Diego-based REIT.

According to Rosen, “Pacific Ridge was a high-profile deal in an extremely desirable location. Our data shows that asking rents in San Diego are up 4.9% from Q1 2016. We anticipate that this increase coupled with the property's prime location across the street from the University of San Diego's campus will help create long-term stabilization and rent growth for the property.”

Berkadia also reports metro San Diego has the third-lowest unemployment rate among major metro areas in California, behind only San Francisco-Oakland and San Jose-Santa Clara. “Renters and investors alike find themselves attracted to this area given the numerous opportunities,” says Chu. “The metro unemployment rate was 4.3% at the end of January, which was 60 basis points below the rate recorded during the same time period in 2016, and it was also 80 basis points below the California rate. Strong employment and apartment fundamentals help fuel a steady market.”

Pacific Ridge, a class-A luxury community located at 5945 Linda Vista Rd., was built in 2013 and offers 533 units with floor plans ranging from studio to three-bedroom. Situated on more than 15 acres with unobstructed ocean views, the resort-style community boasts Moroccan-styled indoor and outdoor retreats, sun-drenched lounges, two saltwater pools and spas and an outdoor grill and dining pavilion.

We spoke with Rosen about the significance of this transaction and what it indicates about San Diego's changing dynamics.

GlobeSt.com: What was significant for you about the Pacific Ridge sale?

Rosen: There was a lot of demand from investors—private as well as institutional—so, the size of the transaction if anything increased the amount of interest for the asset. At this particular time, overall there's a tremendous amount of equity out there, and because of that it's a good opportunity to sell very large real estate deals.