By THOR KAMBAN BIBERMAN, The Daily Transcript
Tuesday, March 15, 2011
San Diego County's current 5-plus percent apartment vacancy would have been slightly lower were it not for the conversion of the 679-unit Vantage Pointe development in downtown San Diego from condominiums to apartments last fall.
MarketPointe Realty Advisors reports the countywide apartment vacancy, which had been 4.75 percent in March 2010, dropped to 4.13 percent last September, before jumping up to 5.06 percent at the time of the March survey.
The report said without the conversion, the countywide vacancy would have been 4.8 percent.
Vantage Pointe had 331 vacancies when MarketPointe conducted its calculations. The complex reportedly cost about $250 million to construct late in the last decade.
While 5.06 percent marks the first time the vacancy rate had climbed higher than five since March 2009 here, San Diego continues to rank as one of the strongest markets in residential rentals.
A Reis report for the fourth quarter 2010 pegged the national apartment vacancy at 8 percent -- the highest that figure has been in the past 30 years.
A Reuters report added that even such strong players as Sam Zell's Equity Residential (NYSE: EQR) apartment real estate investment trust, which paid $200 million for Vantage Pointe last fall, AvalonBay Communities (NYSE: AVB) and Essex Property Trust (NYSE: ESS) have reduced rents and offered incentives in many markets.
Equity Residential is advertising two months free rent on select units at Vantage Pointe according to its website.
San Diego County's apartment vacancy submarket vacancy figures are in quite a narrow range, regardless of where many of the larger complexes are located. MarketPointe restricts its survey to apartment complexes with 25 or more units.
The South County, which experienced a wave of foreclosures in eastern Chula Vista for example, had the lowest vacancy rate in the county at 4.19 percent. The central part of the county, which includes Vantage Pointe, posted the highest vacancy at 6.16 percent.
MarketPointe also noted that while the countywide average rental rate declined between September and March, it only declined by $22 to $1,322 per month _ still quite a high figure when compared to many other areas around the country.
The average rents here ranged from a low of $1,119 in the East County to $1,657 per month in the North County Coastal market.
The San Diego Central market (including Vantage Pointe) had a $1,437 average rent in the March survey and the Interstate 15 Corridor was also quite high with a $1,403 figure.
Vantage Point's standard one-bedroom, one-bath units have base rents generally ranging from about $1,605 to $2,715 depending on size and location. The two bedrooms rent from $2,130 to 2,840 and more again depending on size and location.
Year-over-year, the State Route 78 had the highest percentage increase in rents at 2.17 percent to $1,187 per month.
The East County had the next highest year-over-year percentage increase of 1.63 percent to $1,119.
MarketPointe, which also tracks new residential sales, has seen sizable fluctuations in the number of units it tallies due to whether they are rentals or condominiums.
The report notes that it was March 2003 when the number of units surveyed maxed out at 120,776.
That figure declined over the next several years as condominium conversions became the norm at many complexes around the county, but that trend wouldn't last forever. By March 2007, the conversions were already grinding to a halt.
"Today, with once converted units coming back to the rental market, and several new condominium developments renting units until the 'for sale' market recovers, our current audit measures the performance of 118,041 units contained within 805 rental projects," the report continued.
While MarketPointe says there some 9,127 proposed apartment units, just how many of these will actually be constructed is unclear.
The San Diego Central market, which is still experiencing a surplus of condominium units, has 3,708 apartment units planned.
The Interstate 15 Corridor with 2,187 apartment units, and the South County with 1,707, are the only other submarkets with more than 1,000 units each.
The East County, which was flooded with apartments in the late 1980s and early 1990s, has the fewest planned apartment units at 435.
Marcus & Millichap projects the availability of apartment properties will continue to outpace supply here as would-be sellers hold on awaiting better prices.
The commercial real estate brokerage said this limited availability coupled with the fact that only about 500 market rate apartment units are projected to come on line this year, translates into a market that will be tight for the foreseeable future.
Source: SanDiegoDailyTranscript
No comments:
Post a Comment