Written by
Roger Showley
6 a.m., Aug. 13, 2011
Updated 4:24 p.m. , Aug. 15, 2011
Apartment outlook positive
San Diego is among western markets likely to perform best in the rental market, John Burns Real Estate Consulting says.
In a bulletin posted on the firm’s website, Vice President Peter Dennehy said the “high barriers” to home buying here and in Seattle, San Jose, San Francisco and Orange County make them “among the nation’s top-performing rental markets in coming years.”
“Development money is flowing into apartments and construction activity is already picking up,” he said. “Our apartment feasibility business is growing rapidly and the number of projects we are finding that are on the drawing boards, or with land in escrow at very high prices, is staggering.”
He cited figures that building permits for multifamily housing units are up nearly 70 percent in major western markets.
The Construction Industry Research Board reported San Diego County’s rate even faster. The January-June total for multifamily units authorized was 764 in the first half of 2010 and 1,643 for the same period this year — a 115.1 percent rise.
Dennehy said builders are offering a wide variety of rental types, from townhouses and high-rises to “busted condos” being converted to rental status after developers failed to sell them to individual buyers. Some of these condos were built as apartments, converted to condo status and have been converted back to rentals.
He cited as one example the 680-unit Vantage Pointe tower in downtown San Diego that failed as for-sale condo project and is now nearly 80 percent rented out in less than one year.
“The apartment market clearly presents great opportunity in coming years,” Dennehy said.
But he said investors and builders will have to balance broad analysis with detailed, location-based studies. They also will have to understand renter options to buy and what the future supply of all housing will look like.
roger.showley@uniontrib.com; (619) 293-1286; Twitter: rmshowley; Facebook: SDUTshowley