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Job Growth to Positively Impact San Diego's Multi-Housing Market in 2015

Saturday, June 27, 2015

San Diego job growth was 2.2 percent in 2014 driven by professional, scientific and technical services and manufacturing. It is forecast to increase further to 2.6 percent in 2015, marking demand for multi-housing buildings in San Diego. Employment and Population TotalsThe professional and business services sector is now the largest employer in San Diego, which, because of the higher salaries generally offered within this industry, is expected to increase demand for Class A units.

Said Axiometrics, “San Diego is a late-emerging apartment market, but it made up for lost time in 2014. The job growth and increased tourism will continue to facilitate demand, and the improving economy is allowing snowbirds who always wanted to move to the sun to come on down.”



San Diego Multi-Housing Development

Axiometrics data shows that 3,175 new apartment units were delivered in 2014, highlighting growing demand for multi-housing buildings in San Diego. New supply in 2015 is expected to remain close to that count, with 3,646 units being delivered, and to continue close to that annual count for at least the next four years.

Multi-Housing Building Occupancy and Absorption

San Diego’s multi-housing buildings occupancy rate for 2014 was 96.1 percent, 60 bps above the 1997-2014 average of 95.5 percent. Occupancy rates are expected to moderate to the long term average of 95.5 percent in 2015. Absorption was 4,257 units in 2014 and is expected to lower to 664 units in 2015 followed by 2,205 units absorbed in 2016.

Occupancy in San Diego varies among asset classes and, as of November 2014, Class C had the highest occupancy rate of 98.3 percent. Class B followed with an occupancy rate of 96.3 percent, whereas Class A properties were 95.6 percent occupied.

San Diego OccupancySan Diego Completions and Net Absorption 

Rental Rates for Multi-Housing Buildings

San Diego’s effective rent growth was 5.1 percent in 2014, 160 bps above the 1997-2014 average of 3.5 percent. Rent growth is expected to moderate somewhat to 3.2 percent in 2015 as an excess of new multi-housing buildings and apartment supply comes online.

Class A and B properties shared the strongest effective rent growth during November 2014 with effective rent growth of 6.0 percent. Class C had 4.7-percent effective rent growth during the same time period.

San Diego Rental Rates San Diego Annual Rent Growth

Contact HFF San Diego for more information regarding multi-housing properties on the market in this area.





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