San Diego Is Ready for More Modern Housing

San Diego is ready for more modern housing. The market is seeing particularly high demand for multifamily housing options that have access to lifestyle amenities, like restaurants and entertainment. The proof lies in the incredible success of new developments, like Greystar’s Park 12, which specifically sought to bring highly amenitized housing to the San Diego market. The property—which delivered the first building in July and will be complete early this year—is in the East Village neighborhood of Downtown San Diego.

“Demand is high in San Diego for multifamily housing that offers immediate access to shops, restaurants and more, in addition to variety of onsite amenities that cater to residents’ every need,” Jerry Brand, senior managing director of West Coast-based development company Greystar, tells GlobeSt.com. “Currently, the market is 96% occupied, with demand continuing to exceed supply. Park 12 is helping to meet that demand by offering units suited for a variety of renters—from millennials to baby boomers.”

With several new communities coming online in the market, Brand admits that there will be pressure on demand; however, he has been happy with the reception of the Park 12 project. “The high-end of market is being tested, but to-date, most projects surveyed in the downtown market are achieving absorption at around 25 per month,” he explains. “Projects, which aren’t seeing this absorption, in many cases – have an inferior location or issues with management. The fundaments for ensuring high demand remain the same: location, product and management.”

Despite the active development pipeline in the Downtown San Diego market, Brand remains confident that supply has kept pace with the strong demand for lifestyle-focused, modern, amenitized housing. “My outlook is positive,” he says. “San Diego will deliver close to 6,000 apartment homes this year and under 4,000 next year, with most of the new product located in the downtown area. San Diego’s Standard Metropolitan Statistical Area with a population exceeding three million is not oversupplied.”

While the current construction pipeline fulfilling the strong demand, Brand says that construction activity is slowing due to rising construction costs as well as a slowed job growth. As construction starts slow, it will bode well for the current multifamily supply. “The job market is moderating from over 30,000 in 2017 to around 20,000 new jobs this year and next year, excluding military employment,” he says. “With the job market slowing and construction costs escalating, many deals will not pencil out, leading to fewer starts and stable market occupancy in the 95% plus range.”