What's Important to Apt. Renters, Investors

SAN DIEGO—Tenants have an increased focus on sustainability, while apartment investors are looking for higher returns on new construction, Sudberry Properties' SVP Marco Sessa tells GlobeSt.com exclusively. We spoke with Sessa following the opening of the first phase of West Park, the firm's 612-unit apartment neighborhood at Civita in the Mission Valley submarket, on which GlobeSt.com reported last week, about what makes the new development unique and how he views the development sector for multifamily in San Diego.

GlobeSt.com: What makes Civita and West Park stand out in the multifamily development realm?

Sessa: West Park is a small component of the much-larger Civita. Civita in its entirety has one of the better locations in San Diego County since it's geographically located in the center of the county adjacent to transit and is within a five-mile radius of almost everything including the majority of shopping destinations and Downtown. Location-wise, it has been really interesting to be able to work on a master plan that has all of the benefits of what you would find in an urban setting, but done in a suburban setting. Architecturally, we're trying to have the benefits of a well-thought-out master-planned community in a suburban environment.

GlobeSt.com: How would you characterize the development sector for multifamily in San Diego?

Sessa: For the last four or five years, the sector has done very well. We've seen continued rent growth with some challenges in cost through developed property, but generally the apartment market has done very well here. A lot of it has to do with the strong job growth we've seen in San Diego County, one of the larger metropolitan areas in the country, and San Diego is one of the top cities in job growth. That has equated to pretty strong rent growth for the multifamily environment, and frankly we see that continuing. We're seeing a fair amount of new apartments getting built. The big picture is how little residential was built during the recession, so there's significant pent-up demand.

GlobeSt.com: What are tenants looking for in an apartment community that is different today than it was 10 years ago?

Sessa: We weren't really focused on apartments 10 years ago. What we see today is a strong emphasis on sustainability, the expectation that the communities people are living in—particularly if they are new communities—contain the latest technology in energy efficiency and products that are sustainable and recycle as well as water-efficient. This should all be done in a way that ties in with amenities. There is a push toward smaller units themselves, but with products that are highly amenitized, which is what we try to do with West Park.

GlobeSt.com: How would you describe today's apartment investors?

Sessa: They're looking at great locations, and Mission Valley is probably one of the best in the San Diego County market, primarily because there's a lot of institutional ownership. We see this long-term trend continuing, but investors right now are looking at coastal markets across the country, and San Diego is one of them because of the high barriers to entry. It's difficult to get projects out of the ground and approved. In some new construction, investors want to see higher returns, but it's all positive.