San Diego apartment rents have moderated from their peaks, as increased construction pushed vacancies back up near 5 percent.
A MarketPointe Realty Advisors RentalTrends report stated the average rent -- which had been at an adjusted rate of $1,457 per month last September -- dipped slightly to $1,445 per month in March. The rate stood at $1,385 per month in March of 2013.
The 4.74 percent countywide vacancy rate this month is a modest increase from 4.45 in September 2013, and an even smaller increase from 4.7 in March 2013.
The vacancy figure reached a peak of 5.26 percent in March 2009 during the recession. A 5 percent level is the industry standard for a balanced market.
Downtown San Diego is a submarket that stands out for having a high vacancy rate.
With its average $1,908 rental rate, downtown San Diego has a 17.3 percent vacancy rate. It means that out of 4,748 units surveyed in the submarket, 821 were found to be empty.
MarketPointe reported that the San Diego Central submarket has some 6,405 units in the pipeline.
While many of these are planned for downtown, many are also planned for points further north. In addition, it is unlikely that all of these will be constructed.
MarketPointe reported downtown San Diego currently has 546 apartments under construction in three projects.
These are the 242-unit 15th & Market Promenade by Holland Partners, the 208-unit Lofts @ 688 Market by OliverMcMillan and the 96-unit 418 10th Avenue project by the H.G. Fenton Co.
The 201-unit Broadstone Little Italy development by Alliance Residential was completed recently.
MarketPointe also included apartment projects under construction that are north of downtown in its San Diego Central calculations.
These include 612 units in northwest Mission Valley called West Park by Sudberry Properties in its Civita masterplan, and three in Kearny Mesa: the 444-unit Broadstone Balboa, the 360-unit Broadstone Kearny Mesa -- both by Alliance Residential, and the 253-unit development by Sunroad Enterprises at its San Diego Spectrum development.
An estimated 3,566 units in 11 projects are currently under construction countywide, with many of those projects anticipated to open in late 2014 or early 2015.
Russell Valone, MarketPointe president, said, "I don’t think new releases will all be at once, and the market will absorb them quickly enough."
Not all the apartments are being constructed in central San Diego.
The 1,800-unit Casa Mira View development by Garden Communities in Mira Mesa continues to build out and lease its units, despite relatively high rents that start at $1,525 per month and range as high as $2,400.
Of the 810 units released there 780 are leased, translating to a vacancy rate of just 3.8 percent. Units in that project first came up for rent in December 2012.
Another new apartment development that has also been faring well is ColRich Communities' Casa Lago EastLake development in Chula Vista.
That 343-unit property -- which went up for lease in May of 2013 -- had only 13 units available at the time of the March survey for a vacancy rate that, like Casa Mira View, was also 3.8 percent.
Carmel Partners' 533-unit Carmel Pacific Ridge in Linda Vista -- which started its rental program in April 2012 -- had managed to lease 371 units by the time of the March survey, but that left 162 vacant.
Carmel Pacific Ridge rents ranged from $1,598 to $3,360 per month.
The UDR apartment investment firm started leasing its 267-unit 13th & Market development in downtown San Diego in July 2013. It still had 209 units vacant as of the March audit. The rents ranged from $1,790 to $3,500.
This March 2014 audit of RentalTrends covered a total of 127,441 units contained within the 850 rental projects, an increase of 1,492 from its previous audit last September.
A total of 12,425 units contained within 60 projects have been identified as future market rate rental housing developments in San Diego County.
Following the San Diego Central's 6,405 units, the East County, North County Coastal and Highway 78 Corridor submarkets all had fewer than 1,000 units in the pipeline.