San Diego Rent Growth Tops Rises in Other Southern California Metros
(March 21, 2001) — San Diego renters are facing some of the sharpest rent increases in the nation. Average monthly rents in the San Diego metro soared 13.5 percent between December 1999 and December 2000, according to M/PF Research’s San Diego Apartment Report for 2000’s 4th quarter.
San Diego’s rents, averaging $1,015 per month as of December 2000, are rising far faster than the metro’s pace of overall price inflation of 4.7 percent. The metro’s rent growth performance also was the strongest across the Southern California region, slightly outpacing rent increases in Los Angeles and Orange County and almost doubling the upturn in the Inland Empire.
Same-store price increases — measuring change at the same group of properties from 4th quarter 1999 to 4th quarter 2000 — reached 11 percent in Los Angeles, 11.4 percent in Orange County and 7 percent in the Inland Empire.Robust rent growth also occurred in the San Francisco Bay/Silicon Valley area, Boston and Washington, D.C., while most of the rest of the country experienced average same-store rent growth between 4 and 5 percent, the M/PF report says.
While deliveries in the San Diego increased significantly during recent months, the apartment market saw demand well outpace completions throughout 2000. Completions in the year-ending 4th quarter 2000 totaled 4,058 units, the largest block of new supply delivered during the past decade. Net move-ins over the past year climbed to 7,450 units, the highest annual metro total in recent history. Net move-ins during the October-December timeframe totaled 980 units.
“A big factor in the rising demand is that product availability increased significantly in the past year, when completions nearly doubled the new supply that came online in 1999,” said M/PF Research editorial director Greg Willett. “More than one-third of San Diego’s new productcompleted during the past year came on stream in the popular I-5 corridor submarkets of La Jolla/University City and Northwest San Diego/Encinitas. However, meaningful blocks of new supply also were delivered in the North County city of Carlsbad and in the desirable Mission Valley area north of downtown.”
With demand outstripping completions throughout recent years, occupancy now is about as tight as it can get in most neighborhoods. The metro’s average occupancy reached 98.1 percent in December 2000, up 1.4 points from the year-earlier level. For comparison, apartment occupancy across the U.S. averaged 96 percent as of the 4th quarter. Apartments in each of the 12 San Diego submarkets registered essentially full occupancy of 95 percent or greater, while 10 submarkets posted occupancy rates exceeding 97 percent.
Apartment completions in metro San Diego will climb during the near term, as ongoing construction totaled 4,235 units as of January 2001, including 2,757 apartments scheduled for completion by the end of 2001. The 1-5 corridor cities, as well as the more centrally located neighborhoods of the San Diego area all should witness construction.
|San Diego Apartment Market Profile|
4th Quarter 2000
|Annual Employment Growth||23,300 jobs|
|Annual Apartment Completions||4,058 units|
|Annual Apartment Demand||7,450 units|
Change in Past Year
|Average Quoted Rent
Change in Same-Store Rents
|$1,015 per month
M/PF’s San Diego Apartment Report is a quarterly report that includes data and analysis addressing the local economy and trends in apartment demand, supply, occupancy and rents. Information is summarized on the metro level and detailed for 12 submarkets.
Since 1961, M/PF Research has been the trusted national expert in apartment market research. M/PF is retained by investors, developers, owners and lenders to prepare project-specific market studies and to produce broader, strategic market selection analyses and reports. M/PF Research, located in Carrollton, Texas, is a wholly owned subsidiary of RealPage, Inc., a leading provider of property management software and web services.