SoCal Delivers for Investors in San Diego
The metro benefits from a strong talent pool, renowned universities and its ever-growing biotechnology sector. Inventory is expected to expand significantly in the coming years, given the city’s robust multifamily pipeline and recent pro-development legislation.
By Ariela Moraru
San Diego rent evolution, click to enlarge
San Diego’s multifamily market continues to attract robust investor demand, with transaction activity hot off 2016’s cycle high and already at $1 billion year-to-date through July. The market boasts the fourth-highest occupancy rate among major U.S. metros. As a result, rents were up 4 percent year-over-year as of August, well above the national rate.
The metro benefits from a strong talent pool, renowned universities and its ever-growing biotechnology sector. Plans for several large-scale projects are being fast-tracked in order to satisfy a growing demand. SoccerCity and San Diego State University have their eyes on the Qualcomm site, while the $1.2 billion Seaport Village redevelopment is aiming at a 2020 groundbreaking. The $1.3 billion Manchester Pacific Gateway mixed-use project in the downtown area will serve as the U.S. Navy’s new regional headquarters.
Inventory is expected to expand significantly in the coming years, given the city’s robust multifamily pipeline and recent pro-development legislation. Roughly 9,000 units were underway as of August, and recent bills passed by state legislators are poised to spur additional development in San Diego. Bills passed in mid-September aim to secure funding for affordable housing and streamline the approval process, which should eventually boost supply. As deliveries have yet to catch up with demand, Yardi Matrix expects rent growth to end the year at 4.5 percent.
