Last year, the multifamily market was dominated by immense new projects in downtown — especially in East Village and Little Italy — but many of the new apartment buildings this year are outside of the city center in neighborhoods like University Heights, Pacific Beach, Point Loma and North Park.
“San Diego is perennially undersupplied. It’s a high demand, low supply market. So no matter when and where we get apartments, San Diego just doesn’t have problems with absorption at all,” said multifamily analyst Darcy Miramontes with real estate investment and management firm Jones Lang LaSalle, or JLL.
While San Diego County’s average rent, around $1,900 a month, is less than those markets, investors seem to be drawn to the county because of the potential for growth.
Investors are willing to throw down big sums of money for both new and old projects. The average sale for an apartment was $251,283 in the fourth quarter of 2018, said real estate tracker CoStar, up from $170,994 at the same time in 2014. Davia West Development purchased the Marc apartment building in San Marcos for $141.5 million, or $340,144 a unit. In August, TruAmerica paid $149.5 million for the Alterra apartments in La Mesa, about $283,600 a unit.
On Voltaire Street in Point Loma, near a busy intersection with Nimitz Boulevard, construction has begun on a $16 million apartment complex. The site seems quiet now with just a few workers among dirt, steel bars, dust and wood beams. By the end of the year, it should be a 24-unit apartment building with 9,000-square-feet of retail.
Next Space Development, formed in 2014, is one of the small San Diego developers reshaping the city’s neighborhoods with apartment buildings that rarely rise above a few stories. Its Point Loma project is a homecoming for the 15-employee company.