San Diego’s apartment market is booming in 2021

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By Joshua Ohl

CoStar Analytics

June 29, 2021 | 8:15 AM

San Diego’s apartment market is booming in 2021. Demand has reached a record high as quarterly absorption, which measures the change in occupancy over time, has doubled the long-term average for the region.

The overall vacancy rate has fallen below 4%, while the stabilized rate has fallen to an all-time low below 3%. Landlords have remarked that they haven’t witnessed this level of demand in the past 20 years as many apartment operators are 100% occupied.

Rent growth has responded, and almost everywhere across the region, it has accelerated above the long-term average from Downtown to University Town Center.

The County Board of Supervisors installed a rent cap and extended the eviction moratorium into August, which theoretically caps rent increases at 4.1% over the summer on renewals, far below the current rate of growth for asking rents.

New supply is being absorbed at a strong clip, with more than 15% of new inventory that delivered in the second quarter already occupied.

Investors are also returning to the market, and sales activity has resumed at pre-pandemic levels, but one deal will soon close that will shatter sales records in the county. The Prebys Foundation is selling a portfolio that includes 66 local apartment communities and more than 5,800 apartment units to Blackstone for more than $1 billion.