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Sunday, Sep 25, 2022
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Panel: Rental Shortage Affecting Labor Supply

As apartment construction reaches a high not seen in 12 years, a local trade group reported the residential rental housing supply in San Diego County remains tight.

The 2.2 percent countywide vacancy rate is creating a long-term threat to the local economy as well as making things difficult for tenants, said Gail Scott, president of the San Diego County Apartment Association. Higher housing costs drive working people out of the area and create a labor shortage.

“This is a supply-and-demand issue and we must persuade elected officials to remove the obstacles that limit the rental housing industry’s ability to build adequate housing,” Scott said. “We need to find a way to promote infill and redevelopment by finding alternative infrastructure financing.”

She said a bias against apartments has arisen because state government has encouraged retail commercial construction that generates sales tax at the expense of housing.

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She also said she supports the Jobs Center Housing Package making its way through the state Legislature. The package of bills deals with land use, redevelopment and promoting public transit-oriented communities, she said.

She spoke out against the housing shortage here in conjunction with the release of the San Diego County Apartment Association’s Spring 2000 Vacancy Survey. The survey was mailed to more than 9,000 rental property owners and managers throughout the county. It represents responses covering more than 42,000 units, she said.

The total vacancy rate in the county, excluding the city of San Diego, stands at 1.96 percent, the survey revealed. The vacancy rate within the city was 2.5 percent.

In East County, the vacancy rate was 2.02 percent.

Meanwhile, a recently released study by San Diego-based Burnham Real Estate Services showed permits for 1,658 apartments were issued during the first quarter. That’s the highest total since the third quarter of 1988 when 1,707 permits were pulled and a 44 percent increase over the first quarter of 1999.

The quarterly averages for apartment construction in the boom years of the mid-1980s were 2,103 units permitted in 1984; 3,815 units permitted in 1985; and 2,610 units permitted per quarter in 1986, said George Carlson, a Burnham vice president.

He said the peak quarter of that era was the third quarter of 1985 when 6,529 new apartment units were authorized in the county.

“The amount of new construction under way today still falls well below current demand for rental housing in the county, evidenced by a low 2 percent vacancy rate,” Carlson said.

To complicate the housing problem here, nearly all of the new units cater to the luxury apartment tenant, he said.

“Most of the new construction continues to be comprised of luxury products with higher rents, driven by the high cost of development today,” Carlson said.

Another real estate brokerage predicted a softening in the rental market in the county later this year as new projects come online. Hendricks & Partners, a national firm with a San Diego office, earlier this month released its Vision 2000 Multifamily Forecast for the Millennium.

It predicted the large number of new projects becoming available for rent later this year will create a short-term softening in the market as supply temporarily exceeds demand.

Most new construction is taking place in Mission Valley, North County and South Bay.

The company predicted vacancy rates would rise to 3.1 percent.

Major Downtown redevelopment projects will finish up later this year and that will bring more people to live in the area.

One example of the trend to Downtown is the Marina District, which is being transformed from warehouses and vacant lots by the addition of international hotels, condominiums, apartments, retail and restaurants, the forecast said.

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