Western Real Estate Business

SEP 2017

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

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M A R K E T H I G H L I G H T: S A N D I E G O 46 • September 2017 • Western Real Estate Business www.REBusinessOnline.com SAN DIEGO'S MULTIFAMILY MARKET CONTINUES TO LOOK UP The San Diego market for multifam- ily properties continues to set new re- cords. Over the past 20 years, San Di- ego has had historically low vacancy rates between 2 percent and 6 percent. Rents continue to rise as there is little vacancy for well-located properties. Market rents currently range between $2,000 and $3,000 for well-located two-bedroom units, and between and $1,500 and $2,000 for one-bedroom units. Properties near the coast and downtown are highly sought after, have little to no vacancy and achieve the highest rents in the marketplace. As a result, garden-style multifamily properties are setting records at more than $400,000 a unit in the coastal ar- eas, between $300,000 to $325,000 per unit in North Park and more than $190,000 per unit in areas like El Ca- jon. The Grimes Group recently rep- resented the seller of an eight-unit multifamily complex in Ocean Beach. The property was listed at $3.4 mil- lion, closed at $3.3 million and was on the market for less than 30 days. The Grimes Group also assisted the seller in completing a 1031 tax deferred ex- change of the property. The replace- ment property was in Carlsbad, with- in a short distance of the ocean. The Grimes Group was successful in get- ting the owners to accept an offer that was below their asking price while, at the same time, closing the property for more than $470,000 per unit and outcompeting multiple offers. The Grimes Group also conducted an analysis of the San Diego market- place to compare the current market- place to the value of the marketplace at this time last year. They examined all the sales between the beginning of January to the middle of August in 2016 and 2017. As shown in the table above, the volume of sales has decreased while price per unit sales have increased. There are two economic factors driv- ing the marketplace: increased de- mand coupled and limited supply. The 11 percent increase in price per square foot is a strong indicator of the bullish marketplace San Diego is cur- rently experiencing and is likely to ex- perience in the near future. Anni Grimes President, The Grimes Group at CBCSC A Strong Foundation A successful industrial building begins with a strong foundation. McShane Construction has a proven track record, consistently exceeding client expectations. We can provide cost savings and timeline advantages for your warehouse, distribution facility, manufacturing plant or freezer/cooler operation. www.mcshane-construction.com Follow McShane Construction Built on Experience INCREASED/ 2016 2017 DECREASED Number of Buildings Sold 207 157 -32% Total Number of Units Sold 2324 2002 -16% Average Price Per Unit $200,230 $236,630 18% Average Cap Rate 4.82% 4.46% -8% Average GRM 13.30 14.23 7% Average Price Per SF $298 $331 11% Source: Costar San Diego Multifamily Sales

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