Deliveries Slated for Cycle Peak in San Diego
Strong demand and a relatively slow pipeline keep the city as one of the country’s most stable multifamily markets.
Strong demand and a relatively slow pipeline keep San Diego as one of the country’s most stable multifamily markets. Rent growth, at 4.1 percent year-over-year as of April, continued to heavily outperform the U.S. rate, while the metro struggles with ongoing affordability.
Anchored by the U.S. Navy, prestigious universities, biotechnology clusters and tourism, San Diego’s economy continues to diversify. While the construction sector expanded at the fastest rate, with several large-scale developments underway across the metro, the next spate of mega-projects is already lined up: Hines is planning a $2 billion repurposing of Riverwalk Golf Club in Mission Valley; the $1.5 billion Seaport San Diego is slated to break ground in a couple of years; and SDCCU Stadium is getting closer to redevelopment.
San Diego had roughly 8,300 units under construction as of April, and the metro is expected to add more than 5,000 units throughout 2018. This would mark a strong cycle peak, surpassing the 3,800 units delivered in 2016. In line with nationwide trends, occupancy in stabilized properties dropped 110 basis points in 12 months, to 96.1 percent as of March. Even so, as San Diego’s housing crisis deepens and rental demand is poised to remain strong, Yardi Matrix expects rents to advance by 3.5 percent in 2018.