San Diego Multifamily Market Now Concession-Driven

With rent growth flattened and increased vacancy, generous landlord concessions increasingly are common in San Diego’s multifamily market.

The average rent in the county at the beginning of September was $2,491 a month, with annual growth flat at 0.5%, according to CoStar data. The countywide vacancy rate has hit 5.2%, the highest level since the beginning of the pandemic in Q1 2020.

This plateau has followed an unprecedented surge in multifamily rent growth in the region during the pandemic—average rents rose 13% in 2022, the equivalent of three years of normal growth in 12 months.

Affordability has become an issue for many prospective tenants and many landlords are upping concessions to entice them into apartment leases, according to a report in the San Diego Union-Tribune.

“We’re becoming a concession-driven market. People are willing to sacrifice location and amenities for price,” said Lucinda Lilley, an apartment specialist, who consults for three property management firms.

Lilley, a former president of the Southern California Rental Housing Association, told the newspaper that landlords in the county are adjusting to the fact that a growing number of renters are facing a cost of living increase that has outpaced wages.

Concessions, including up to two months of rent-free, also can be found at some of the newest and most expensive apartment buildings. Based on a survey of CoStar data and websites for multifamily campuses, the report offered several examples of the current state of play across the region.

In Downtown San Diego, the vacancy rate is 11.2% and the average monthly rent is $3,076, down 1.3% in the past year. According to the report, a 431-unit apartment tower that is the largest recent delivery in the county—with an average rent in the building of $4,803 a month—now is offering up to two months off on some units.

In the North Shore Cities, encompassing Del Mar, Encinitas and Solana Beach, the average monthly rent is $3,537 and the vacancy rate is 5%. The report cited a 252-unit complex that opened in 2018 which is offering up to one month free.

In the La Jolla/UTC area, a luxury campus that was completed in 2022 and offers some of the most expensive units in the county—averaging $5,147 a month—now is offering up to two months off on select units, the report said.

Several other markets in the county were cited in the report, all providing concessions of between one and two months off, except for the South I-15 corridor, which includes Sorrento Valley, Mirimar and Mira Mesa, where the vacancy rate is 4.3%, the average rent is $3,017 and no concessions were found.