San Diego Multifamily Report – Summer 2020
While transaction activity nearly halted since March, rent growth recorded a healthy rebound during the third quarter.
San Diego rent evolution, click to enlarge
San Diego’s multifamily sector has not lost its shine. After five months of contractions, the metro’s rents rebounded with a 0.2 percent increase to $1,987, on a trailing three-month basis through August, while the U.S. rate remained flat at $1,463 during the same period. Meanwhile, the metro’s occupancy rate in stabilized properties dropped 70 basis points to 95.6 percent in the 12 months ending in July.
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San Diego sales volume and number of properties sold, click to enlarge
Initial unemployment claims filed across the state between mid-March and the end of August exceeded 8.1 million, and San Diego registered historic highs in April and May, hitting the 15.0 percent mark. The jobless rate slid to 13.8 percent in June, while preliminary July data pointed to further improvement, clocking in at 12.3 percent. Professional and business services—San Diego’s largest sector—shrunk by only 2.5 percent in the 12 months ending in June, faring better than San Francisco. In the meantime, Gov. Gavin Newsom has extended the state’s eviction moratorium through January.
Following last year’s cycle peak for deliveries, developers added 1,748 units this year through August, with an additional 8,581 apartments underway. Deals nearly came to a halt in San Diego this year, with transactions totaling just $129 million in the first eight months of 2020. By comparison, nearly $1.6 billion in multifamily assets traded across the metro in 2019.
