San Diego This may come as no surprise to anyone who’s driven through downtown San Diego and seen all the construction cranes, but more new apartments are being built downtown than anywhere else in San Diego County, according to Apartments.com, an apartment listing company.
As of May — the latest month for which figures were available — 3,454 apartments were under construction downtown — accounting for 38.2 percent of all downtown apartments.
The catch is that most of those new apartments are in pricey towers.
On the flip side of the report, new apartments were scarce along the Interstate 15 corridor north of state Route 56, where a paltry 43 apartments were under construction as of May, and the existing inventory was 18,590 units.
The Apartments.com report excluded East County, including El Cajon, La Mesa, Lemon Grove, Santee and Spring Valley, where apartments tend to be plentiful and rents tend to be lower.
“We’re just not showing anything under construction out there,” said Joshua Ohl, senior market analyst with the CoStar Group, which includes Apartments.com.
“If there’s anything under construction, it’s minimal. They’re just not building anything out there,” Ohl said.
The same is true for such submarkets as Poway and Ramona, Ohl said.
With construction costs rapidly rising, rents for apartments in those submarkets are too low for developers to recoup their investment, Ohl said.
Of the submarkets the company surveyed, central San Diego was second in new apartment construction, with 1,153 apartments under construction as of May with an existing inventory of 33,409.
Although construction of new apartments was a tad sluggish in the Chula Vista/Imperial Beach submarket with 680 units under construction as of May, Ohl said Chula Vista was one area where construction might soon pick up.
Of the new apartment projects going up, many are targeting millennials — generally people between the ages of 20 to 39.
Traditionally, that age bracket has always been seen as a strong market, but in San Diego, it also happens to be the biggest chunk of the region’s population, accounting for 31.1 percent of county residents, according to a report from Cushman & Wakefield.
Among U.S. metropolitan areas, San Diego has one of the highest concentrations of millennials.
The only age bracket that comes close to millennials in the county is children from newborns to age 19, who account for 25 percent of the population, followed by people between the ages of 50 to 64 at 18 percent, 65 and older at 14 percent, and 40 to 49 at 12 percent.
“San Diego currently has the largest proportion of working-age people in its history,” Jolanta Campion, director of research in Cushman & Wakefield’s San Diego office wrote in the report.
That’s good news, because, “having a large share of the population generating income bodes well for the economy.”
The bad news, as reported by Cushman & Wakefield, is that monthly apartment rental rates are at an all-time high with a countywide average of $1,887 as of March 2018 compared with $1,748 a year ago.