Even in a widely recognized undersupplied housing market, only 954 market rate apartment units delivered across San Diego in the first half of 2019. That’s almost 1,000 fewer units than delivered in the first half of 2018. It’s the fewest units delivered in a two-quarter stretch since the fourth quarter of 2016 and the first quarter of 2017.
The largest new community opened in June, Hanover Mission Valley. The 4-Star, 385-unit companion to last year’s 374-unit Hanover Mission Gorge is located within a 15-minute walk to the Trolley’s Green Line stop at Grantville. Rents average above $2,400 per month, with one month of free rent. About 20 units were leased within the first few weeks of opening.
In the Downtown San Diego submarket, two new properties delivered this year.
The first, the 5-Star Luma in Little Italy, delivered in January with 220 units. It is the largest apartment community built in Little Italy since the 224-unit Ariel delivered in 2014. Average rents are among the highest in San Diego, at more than $3,900 per month. Studios, alone, average $3,000 per month. Concessions amounting to about three weeks free are offered for various units. Luma has averaged leasing 22 units per month.
Then in May, the 99-unit F11, in the East Village, delivered. It’s one of the smaller properties to be built there, where communities with more than 250 units are the norm. In fact, outside of the nine-unit Mitra, it’s the smallest delivery in terms of units the East Village has seen since the recession. Rents average almost $2,700 per month and one month free is offered on select units. It had 13 move-ins the first month.
The F11 is the first of two Richman Group developments in the East Village that are scheduled for delivery in 2019. The other is K1.
Otherwise, the balance of new properties are sprinkled across San Diego and average only 35 units.
This is a stark contrast from last year, when net new supply had a post-recession peak, with 4,300 units. This year, net deliveries are expected to fall short of 3,800 units.
It’s worth noting that the San Diego housing commission estimates that San Diego should add roughly 18,000 housing units, annually, over the next decade to keep pace with population growth. This comes as housing permits have fallen in 2019, with apartment annual rent growth slowing beneath the long-term average for the first time since 2012.
