The squeeze is on multifamily cap rates in certain San Diego markets, and it’s driving investors elsewhere—but still within the city limits. (As the original housing repositioning expert, Dorothy Gale, told us: "There's no place like home.")

Apartment Realty Group senior managing director James Carter (right, with colleague Doug Taber) tells us that years of rush to buy in Uptown, and the beach submarkets have compressed cap rates so much (to around 4.5%) that investors are now looking to Talmadge, Normal Heights, City Heights, Golden Hill, and Sherman Heights, where cap rates are 50 to 100 bp higher, but returns are similar or better.

Talmadge, with its proximity to Kensington and SDSU, is luring investors who want decent returns and are willing to make the capital improvements needed to attract higher-paying tenants. James and Doug recently repped the seller of Talmadge Palms Apartments (4480 Euclid Ave), adjacent to a quiet single-family neighborhood. The improvements already made on neighboring properties make it a more appealing place to reside, he tells us.