The San Diego County Rental Market Boom Peter Dennehy, Senior Vice President Meyers Research, LLC
San Diego Employment Growth Employment History & Forecasts San Diego County, CA - Ten Year History 25 26 27 28 29 21 211 212 213 214 Non-Farm Employment Total 1,291,58 1,311,3 1,319,683 1,311,858 1,245,242 1,236,175 1,245,98 1,279,28 1,312,433 1,344,593 Prior Year Change 22,95 2,242 8,383 (7,825) (66,617) (9,67) 9,733 33,3 33,225 32,16 Annual % Change 1.8% 1.6%.6% -.6% -5.1% -.7%.8% 2.7% 2.6% 2.5% Unemployment Rate 4.3% 4.% 4.6% 6.% 9.6% 1.6% 1.1% 8.9% 7.5% 6.3% 2
How Does San Diego Compare to National MF Market? Source: Marcus & Millichap 215 National Apartment Report 3
San Diego Capital Markets Trends Sales Price Smoothed Cap Rate Vacancy Rate Percent Change 7.% 6.% 5.% 4.% 3.% 2.% 6.% 5.% 4.% 3.% 2.% 1.% Smoothed Cap Rate Vacancy (%) 1.%.% 23 24 25 26 27 28 29 21 211 212 213 Q3 214.% $26, $24, $22, $2, $18, $16, $14, Raw Price per Unit Annual Price Change 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% $12, -2.% $1, 23 24 25 26 27 28 29 21 211 212 213 Q3 214-3.% Source: CBRE Econometric Advisors 4
Carlsbad/ Encinitas/ Del Mar Chula Vista/ Imperial Beach Downtown San Diego/Coronado El Cajon/ Santee/Lakeside Escondido North San Diego I-15 Corridor La Jolla/ University City La Mesa/Spring Valley National City/ North & South Park Mission Valley/ Kearny Mesa Central San Diego Coastal Oceanside Vista/ San Marcos SAN DIEGO AVERAGE Vacancy Rate Q3 214 Trends by Submarket La Jolla/University City Carlsbad/Encinitas/Del Mar Mission Valley/Kearny Mesa Downtown San Diego/Coronado North San Diego I-15 Corridor SAN DIEGO AVERAGE Central San Diego Coastal Chula Vista/Imperial Beach Vista/San Marcos Oceanside La Mesa/Spring Valley El Cajon/ Santee/Lakeside National City/North & South Park Escondido Rent Price $1,161 $1,914 San Diego Average Rent: $1,548 $ $2 $4 $6 $8 $1, $1,2 $1,4 $1,6 $1,8 $2, 4.% Vacancy San Diego Vacancy: 2.7% 3.% 2.% 1.%.% Source: CBRE Econometric Advisors, Meyers Research 5
CBRE San Diego Submarket Map Legend 1 Downtown San Diego/Coronado 2 Northwest San Diego (Central San Diego Coast) 3 Northeast San Diego (Mission Valley/Kearny Mesa) 4 Mid-City/National City (National City/North & South Park/Logan Heights) 5 La Mesa/Spring Valley 6 Chula Vista/Imperial Beach 7 La Jolla/University City 8 Far North San Diego (North San Diego I-15 Corridor) 9 El Cajon/Santee/Lakeside 1 Carlsbad/Encinitas/Del Mar 11 Oceanside 12 Vista/San Marcos 13 Escondido Source: CBRE Econometric Advisors, Meyers Research 6
Q3 214 Trends by Submarket # of Units # of Units Carlsbad/ Encinitas/ Del Mar Carlsbad/ Encinitas/ Del Mar Chula Vista/ Imperial Beach Chula Vista/ Imperial Beach Downtown San Diego/Coronado Downtown San Diego/Coronado El Cajon/ Santee/Lakeside El Cajon/ Santee/Lakeside Escondido Escondido North San Diego I-15 Corridor North San Diego I-15 Corridor La Jolla/ University City La Jolla/ University City La Mesa/Spring Valley La Mesa/Spring Valley National City/ North & South Park National City/ North & South Park Mission Valley/ Kearny Mesa Mission Valley/ Kearny Mesa Central San Diego Coastal Central San Diego Coastal Oceanside Oceanside Vista/ San Marcos Vista/ San Marcos 6, 5, Inventory 5,837 296,237 total units in San Diego 4, 3, 2, 15,5 1, Completions vs Net Absorption (Q1 - Q3 214) 1,4 1,279 1,2 1, 8 865 San Diego Net Absorption: 4,393 6 4 2 Source: CBRE Econometric Advisors, Meyers Research 7
San Diego Historical Rent Index Same-Store Rent Index (Avg $/unit) 1995 71 1996 747 1997 782 1998 83 1999 86 2 961 21 1,29 22 1,76 23 1,14 24 1,112 25 1,166 26 1,182 27 1,216 28 1,266 29 1,243 21 1,243 211 1,275 212 1,325 213 1,368 214 1,431 215 1,478 216 1,523 217 1,577 218 1,627 219 1,671 Rent Index History & Forecasts San Diego Metro Area - Ten Year History Baseline Five-Year Forecast 25 26 27 28 29 21 211 212 213 214 215 216 217 218 219 Same-Store Rent Index $1,33 $1,343 $1,388 $1,433 $1,392 $1,393 $1,425 $1,456 $1,51 $1,56 $1,616 $1,67 $1,733 $1,793 $1,846 Prior Year Change 47 4 46 45 (41) 32 31 45 59 56 54 63 6 53 Annual % Change 3.6% 2.9% 3.3% 3.1% -2.9%.% 2.3% 2.2% 3.% 3.8% 3.4% 3.2% 3.6% 3.3% 2.9% 1,8 1,6 1,4 1,2 1, 8 6 4 2 Source: CBRE Econometric Advisors Outlook Source: CBRE Econometric Advisors 8
Multi-Family Construction: San Diego Market # of Units # of Permits Issued 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Completions 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 9, 8, 7, 6, 5, 4, 3, 2, 1, Multi-Family Permits 14-Year Average: 4,68 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 Source: CBRE Econometric Advisors, Department of Housing and Urban Development 9
Building Permit Issuance San Diego County (1946-214F) 1
Multi-Family Future Pipeline by Submarket Vista/San Marcos Oceanside Central San Diego Coastal Mission Valley/Kearny Mesa National City/North & South Park La Mesa/Spring Valley La Jolla/University City North San Diego I-15 Corridor Escondido El Cajon/Santee/Lakeside Downtown San Diego/Coronado Chula Vista/Imperial Beach Carlsbad/Encinitas/Del Mar Vista/San Marcos Oceanside Central San Diego Coastal Mission Valley/Kearny Mesa National City/North & South Park La Mesa/Spring Valley La Jolla/University City North San Diego I-15 Corridor Escondido El Cajon/Santee/Lakeside Downtown San Diego/Coronado Chula Vista/Imperial Beach Carlsbad/Encinitas/Del Mar Market Rate (Apartments/Mixed-Use) $2./SF $2.5/SF $1.75/SF $2. - $2.5/SF 5 1, 1,5 2, 2,5 3, 3,5 4, 4,5 Pre-Planning Planning Underway Completed 214 Subsidized/Mixed-Income Units $2.75- $3./SF 2 4 6 8 1, 1,2 1,4 Source: CBRE Econometric Advisors, Meyers Research 11
Distribution of Multi-Family Pipeline by Building Size # of Projects # of Projects 5 4 3 Market-Rate Completed 214 Underway 2 1 Planning < 5 units 5-9 units 1-19 units 2-49 units 5 + units Pre-Planning 12 1 8 6 4 2 Subsidized/Mixed-Income < 5 units 5-9 units 1-19 units 2-49 units 5 + units Completed 214 Underway Planning Pre-Planning Source: CBRE Econometric Advisors 12
The San Diego County Rental Market Boom Peter Dennehy, Senior Vice President Meyers Research, LLC