Suburban Areas Are Driving San Diego Apartment Rent Growth
Top Areas for Rent Growth Offer Steep Discount on One-Bedroom Rentals
By Joshua Ohl
March 11, 2021 | 12:41 P.M.
The leaderboard for top rent growth among San Diego’s apartment submarkets has changed many times over the years. At various points, some of San Diego’s most expensive submarkets, including La Jolla/University Town Center and Coronado/Point Loma, led the region. But at almost no other point in recent history has the leaderboard provided such a lineup of submarkets, clearly delineating a shift in demand as renters have shown increased interest in the suburbs and San Diego’s more affordable neighborhoods.
In North County, 12-month net absorption, which measures units moved into versus units moved out of, has reached a historical peak with more than 700 units absorbed in the past year. Annual rent growth has responded and sits at 4.4%. That’s better than the five-year average for the submarket, at 3.9%. The submarket is boosted by affordable apartments, particularly in the interior, as well as a thriving tech and life sciences scene in Carlsbad.
The only urban submarket to make the list, National City, is the lone neighborhood with average rents under $1,500 per month. Average asking rents for one-bedroom apartments are more than $1,000 per month cheaper than in neighboring downtown San Diego, and annual rent growth of 4.1% outpaces the five-year average by 10 basis points. National City also has one of the highest unemployment rates in San Diego, according to the latest report from the Bureau of Labor Statistics, ending 2020 at 11.5%.
No other submarket in San Diego came close to matching the surge in demand in Chula Vista amid the pandemic. Annual net absorption peaked at over 1,000 units at the end of 2020. In turn, the stabilized vacancy rate has fallen below 3%, while annual rent growth has reached its highest level in more than a year, at 3.6%, which is right in line with its five-year average.
Like the other submarkets on the leaderboard, demand has surged in East San Diego. Annual net absorption has reached a 10-year high, with more than 450 units absorbed over the past 12 months. The stabilized vacancy rate has also fallen below 3% for the first time. Annual rent growth has risen to its highest level in more than a year, at 3%, nearly returning to the submarket's five-year average.
Affordability is one of the primary reasons that demand has surged in these areas. One-bedroom apartments in the top six submarkets for rent growth in San Diego average $1,450 per month. Conversely, one-bedrooms in the submarkets in the bottom half are San Diego’s more expensive, with average rents of $2,000 per month, and often are primary employment nodes.
Only one submarket with average rents above $2,000 per month ended 2020 with rents growing year over year: Mission Valley. The others were either flat or declined. But nearly three months into 2021, only the La Jolla/University Town Center submarket has recorded rents falling year over year. The overall region’s apartment market rests on firm ground, and rents have grown 2.4% in the past 12 months, just 0.4% below the long-term average.
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