San Diego Dominates SoCal Recovery
While the region has felt the economic tailwinds this past year, San Diego has been the “star performer,” says UCLA Anderson Forecast's senior economist Jerry Nickelsburg.
Jerry tells Bisnow San Diego's success could stem from some struggles in other markets. He says Orange County is still digging out of the subprime mess, and LA and Ventura are focused on manufacturing, which hasn't experienced the same growth as biotech and tech. And if there's any doubt about San Diego's recovery, the county actually has recovered all the jobs lost in the Great Recession "and then some," thanks in part to the biotech industry, Jerry says during the Allen Matkins/UCLA Anderson Forecast-California Commercial Real Estate Survey video released here.
Jerry expects the economy to continue to improve, and adds the skyrocketing prices being fetched by apartment products here—with record low caps—is still in line with the rising rents and occupancy rates. “That's not a speculative level of price.” There's also some snazzy new product coming online, such as Zephyr Partners' planned condo project on Bankers Hill (here) that we reported last week.
Allen Matkins also spoke with Raintree Partners CEO Jeff Allen in the vid, who says that pricing in Northern California has caused his firm to look south for multifamily investments. “When pricing gets to a level when we can't make appropriate risk-adjusted returns, we start to get nervous,” Jeff says. He says SoCal has a small runway left in terms of growth, with better opportunities in the next two to three years.