The multifamily market is strong in America’s Finest City, where employment and population gains, along with a high barrier to homeownership, drive rent growth. Demand is especially solid among Millennials drawn to the region’s well-paying STEM-oriented jobs.
Employment gains were led by professional and business services (11,500 jobs), followed by education and health services (5,000). As employers often recruit from outside the county, the tech industry is a significant contributor to the area’s positive net migration, with fields such as cybersecurity, biotech, software development, data analytics and robotics expanding. The ongoing expansion of office-using employment is boosting demand for space, prompting further development. The $1.5 billion Manchester Pacific Gateway, one of the largest mixed-use developments in San Diego’s history, broke ground in June. Plans call for 1 million square feet of Class A office space, two hotels, restaurants, retail space and a museum.
A high occupancy rate in stabilized properties and above-average rent gains are pushing up multifamily property values. As demand continues to outpace supply across the metro, we expect rent growth to remain fairly steady for the foreseeable future, in line with the 3.9 percent year-over-year rate recorded in September.