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Apartment vacancies remain stable; rents continue to rise

San Diego County’s average apartment vacancy has changed little over the past six months, but rents have become incrementally more expensive.

A MarketPointe Realty Advisors’ RentalTrends survey found that with some new developments beginning to come online, the average vacancy inched up to 4.71 percent in March 2013, from 4.45 percent a year ago and 4.5 percent last September .

“The overall vacancy rate which topped 5.26 percent in March 2011 has fluctuated modestly over the past 18 months to a current average of 4.71 percent," MarketPointe stated. "Not exactly on par with the 2 percent vacancy rate run that occurred in the late 1990s and into the early 2000s, but a healthy rate nonetheless. Furthermore, 10 percent of the vacant units are in the 10 projects that opened in 2012 that are going through their initial lease up period.”

The San Diego Central submarket had the highest vacancy, with a 5.5 percent rate -- which is not considered a high figure, given that a 5 percent rate is the industry standard for a market in balance.

The East County had the lowest average apartment vacancy in March at 3.13 percent, as well as the lowest average rent of $1,161 per month.

The North County Coastal submarket had the highest average rent at $1,712.

The report said after a decline in countywide rental rates during the recession, they began to turn around when the level climbed from $1,310 in September 2010 to $1,326 in March 2011.

The countywide average rent has climbed slowly since then, and reached $1,388 per month in March.

Despite escalating rents, MarketPointe said it anticipates "demand for rental units continue to intensify as lack of confidence in the for-sale housing sector coupled with continued population growth, especially among echo boomers [under 35 years of age] who are somewhat hesitant to purchase for a number of reason, continues to accelerate.”

That said, Alan Nevin, a London Group Realty Advisors principal, countered that interest rates are low enough now that all things being equal, it makes much more sense to buy rather than to rent.

“At this point owning makes a lot more sense,” Nevin said. “The benefits of owning plus the tax write-off are a no-brainer.”

Nevin said with a 3 to 5 percent down payment requirement, qualifying for a home generally isn’t that difficult, considering what needs to be set aside for rent.

In the meantime, new apartment complexes continue to be built. MarketPointe identified 10 newly-completed rental properties totaling 1,799 units opened since April of last year.

Casa Mira View, a Garden Communities development in Mira Mesa offered its first 90 units of what is expected to be an 1,800-unit development.

A total of 80 of those first 90 units had been rented by mid-March. Casa Mira View’s rents ranged from $1,325 to $2,175.

The 379-unit Domain by Alta opened for rent in Kearny Mesa in June of last year. Wood Partners was the developer.

A total of 134 units had been rented by the time of this month’s survey. The rents ranged from $1,515 to $2,775.

The 533-unit Carmel Pacific Ridge project on the former University High School site in Linda Vista, which started leasing in April of last year, has made its first 363 units available for rent and leased 171 of them.

Carmel Partners is developing the project that had rents ranging from $1,482 to $3,840.

Circa 37, a 306-unit property by Sudberry Properties in northern Mission Valley, began leasing in April and had leased 279 units by the time of the current month’s survey. Circa 37’s rents ranged from $1,680 to $2,810.

The 17-unit Tavera at Otay Ranch, which MarketPointe said was developed by the Global Integrity development firm, has seen all but one unit rented as of the date of the March survey. The rents at that development ranged from $2,350 to $2,542.

A total of 12,458 units contained within 58 projects have been identified as future market rate rental housing developments in San Diego County.

The San Diego Central submarket will be the most active, with just under 5,300 units in the entitlement process.

The East County and North County Coastal submarkets each have fewer than 1,000 units in the pipeline.

An estimated 4,000 apartment units in 11 projects are currently under construction countywide, with many of those projects anticipated to open in 2013.

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