Though San Diego continues to struggle with housing availability and affordability, Q4 promises to be strong for multifamily deliveries.
The spike of 2,800 rental units set to deliver in Q4 will mean the strongest quarter for delivery volume since 2001, according to Marcus & Millichap's San Diego Multifamily Market Report. Many of those new units will be outside of downtown, which will have about 450 new units. Northeast San Diego will have 900 units across three projects in Mission Valley and Kearny Mesa. Another 600 units are planned to come online in the Carmel Valley in Carlsbad, Encinitas and Del Mar.
New projects that have opened in recent weeks that add to San Diego's housing include the $91M IDEA1, a mixed-use development that combines 295 units of apartments and live-work lofts with 7,700 SF of office and 5K SF of ground-floor retail. The project, from Lowe, LaSalle Investment Management and I.D.E.A. Partners, is the center peg for the I.D.E.A. District, which is focused on community innovation. Residents started moving in Nov. 11.
In the past four years, job creation, growing households and high home prices have driven up demand for multifamily in San Diego, Marcus & Millichap reports. Though 16,000 apartments came online during that time, vacancy has barely budged. Vacancy is forecast to end the year at 4.2%. Affordable Class-C availability is around 1% as renters look for apartments they can afford.
In North County, the new Eastgate Apartments opened this month, providing 42 units of affordable housing in San Marcos. The community is designed for veterans and families with household incomes between 50% and 60% of the area median household income level. The complex is part of a mixed-use project with 7K SF of commercial space.
For the year, Marcus & Millichap reports 6,200 units will be completed, up from 4,300 units last year. The brokerage experts rents to increase 6.7% by the end of the year, with the average at $1,875/month.
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