Steady San Diego

Rents were up 4.8 percent in the year ending in March, continuing to outperform the national average, Yardi Matrix data shows. And at 96.8 percent, the metro’s occupancy rate is one of the highest in the country.

San Diego rent evolution, click to enlarge
San Diego rent evolution, click to enlarge

Gaining jobs across most sectors and rapidly adding residents, San Diego continues to be a strong and stable multifamily market. At 96.8 percent, the metro’s occupancy rate is one of the highest in the country, underlining the city’s housing shortage and justifying the growing construction pipeline. Rents were up 4.8 percent in the year ending in March, continuing to outperform the national average.

Anchored by international trade, biotechnology, military operations and tourism, San Diego’s economy is a mixed basket benefiting from a deep talent pool as the city’s network of universities and research facilities offer startups solid ground and a cheaper alternative to Silicon Valley. With the $2 billion trolley expansion underway, San Diego continues to draw large-scale projects. Manchester Pacific Gateway, a $1.3 billion mixed-use development, will house the new U.S. Navy headquarters. Greystar’s Ballpark Village, the mega-project slated to bring 713 rental units to downtown, is also in the works. The list also includes the $1.2 billion Seaport project and FS Investors’ proposal for the Qualcomm Stadium site.

Offering acquisition yields akin to those of Los Angeles and San Francisco, the metro remains a fairly predictable and hot secondary market, with roughly $3.5 billion in assets having traded over the past two years. And as supply is slowly catching up with demand, Yardi Matrix expects rent growth to remain at sustainable levels, reaching 4.5 percent in 2017.

Read the full Yardi Matrix report.