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Downtown San Diego apartment boom: Roughly 1,500 new apartments opening this year

San Diego Union Tribune logo San Diego Union Tribune 3/23/2023 Phillip Molnar
The Radian apartment complex at East Village in downtown San Diego. The first tenants will be moving in by June. (Kristian Carreon/For The San Diego Union-Tribune) © Provided by San Diego Union Tribune The Radian apartment complex at East Village in downtown San Diego. The first tenants will be moving in by June. (Kristian Carreon/For The San Diego Union-Tribune)

Downtown San Diego is about to get a lot more residents.

There are roughly 1,500 new apartments set to open this year throughout East Village, Little Italy and other parts of downtown.

After two slow years, San Diego's downtown didn't see a ton of new residential units, but major projects that have been in the works are finally opening — all within months of each other.

Considering the time it took to build, the projects were mostly unaffected by increased borrowing costs that have put a chill throughout the residential construction industry. All were in the planning stages before the pandemic.

It isn't just downtown seeing a lot of activity. There are around 4,700 new units across San Diego County — about the same as last year — spread throughout the region to the Midway District, Oceanside, Chula Vista, North Park, Point Loma, National City and others.

Alan Nevin, a local real estate analyst with Xpera Group, said developers are still motivated to build apartments — despite inflation and other economic concerns — because unemployment is low, there are plenty of high-paid workers moving to the area for tech and biotech jobs, and vacancy rates have remained low.

"The reality is as long as occupancy rates are over 95 percent, they see an opportunity," he said. "They have been able to raise rents successfully without destroying occupancy rates."

The countywide vacancy rate is around 4 percent, according to real estate tracker CoStar. That is up from the pandemic low point of 2.4 percent in the third quarter of 2021, but still one of the lowest vacancy rates in the last 23 years. Nevin said another thing that will help apartment owners is for sale housing in San Diego is expensive, and rising interest rates keep many potential first-time homeowners in the rental market.

The biggest project opening this year is the Bevel apartment complex on Barnett Avenue with 405 units in the Midway District across from the Marine Corps Recruit Depot. It is followed by Simone, near Little Italy, with 395 units; 800 Broadway in East Village with 384 units; and Winslow in University Heights with 379 units.

Many of the new apartment complexes that are opening will do little to quell arguments that the region is only building luxury housing. Developers threw in a lot of bells and whistles: Dog lounges, speakeasies, pools, gyms, game rooms and plenty of other features that are reflected in final rent prices.

Joshua Ohl, a CoStar senior director of market analytics, said the reality is downtown is about to have a substantial influx of new apartments and each project needs to find a way to stand out.

"It adds a couple hundred dollars extra a month in rent but it's what you need to compete down there," he said. "It's five-star quality amenities to attract renters right now."

Final rents are not set at most of the projects that are opening, but it's fair to assume they will be higher than the countywide average of $2,353 a month, according to CoStar data. Perhaps beneficial to renters, average price increases have slowed slightly after a huge rise during the tail-end of the pandemic.

Rents had increased 14 percent in a year as of the first quarter of 2022, a substantial rise following a lull in the early days of the pandemic. Yet rent increases have slowed considerably in the last six months — still up around 4 percent annually, but down from hefty jumps at the start of last year.

A lot more residents downtown might be welcome news to office developers that are banking on tech and biotech businesses moving to the city center. Kilroy Realty is looking to build a 137-foot tall development on Pacific Highway with 309,000 square feet of office space, Horton Plaza's redevelopment is under construction with 772,000 square feet of office space and the massive IQHQ project on the San Diego Bay is also under construction with plans for 1.4 million square feet of retail and office space.

Despite high-profile projects, there are still obstacles downtown with traffic likely to get much worse, considering most office and apartment projects include parking, and the homeless situation. The downtown homeless population reached a record high of 1,939 people in January, said a count conducted by the Downtown San Diego Partnership.

Encampments throughout downtown, especially in East Village, have reached a boiling point with some residents who say the situation keeps getting worse.

Betsy Brennan, CEO of the Downtown San Diego Partnership, said new complexes go a long way in helping improve the area. For starters, she said a lack of office workers downtown — many on hybrid schedules or still working from home — have hurt small businesses, such as cafes, restaurants and other specialty shops. Heaps of new residents help those businesses stay alive, Brennan said.

"During the pandemic, downtowns that had a robust residential component really weathered the pandemic much better," she said. "There were still people that needed to get coffee, and use a lot of the commercial and retail spaces."

Brennan said downtown development can also aid in housing woes for low-income San Diegans because the projects are required to have subsidized housing or pay fees that are used for building more housing.

Radian: High-end apartments walking distance to Petco Park

After a few explosive years of residential construction in East Village, it seemed for a moment that things might have slowed down. That changes this year with three big complexes opening.

The biggest is 800 Broadway between Eighth and Ninth avenues with 384 apartments, followed by Jefferson Makers Quarter on 15th Street with 368 apartments and the Radian complex on 9th Avenue with 241 apartments.

While all projects are in East Village, the 22-story Radian may have an advantage in its location. It is three blocks from Petco Park where a resurgent San Diego Padres are regularly selling out games. Even if Radian renters despise baseball, Petco Park has also become a hub for major concerts.

Jason Wood, principal at developer Cisterra, said he was proud that Radian used its best possible view as a skydeck for all residents, instead of turning it into a penthouse for one person. The skydeck faces into Petco Park and looks directly toward home plate. You can't exactly call balls and strikes from the distance but isn't a bad view for not buying a ticket.

"I don't think anyone can replicate what we have," he said during a recent tour of the $150 million property with The San Diego Union-Tribune.

The skydeck also includes a pool, hot tub, pizza oven, barbecue pits, kitchen area and cabanas. Other amenities spread out throughout the building include an indoor/outdoor gym, co-working space, outdoor area for dogs, dog wash station (Cisterra likes to call it a "dog spa"), washer and dryers in units, floor-to-ceiling windows and the latest appliances.

Amenities make their way into rents, which are some of the highest downtown and rival costs at new projects in Little Italy. Average rent for a one-bedroom (748 average square foot) at Radian is $3,382 a month, said CoStar. The majority of apartments, 150, are one-bedrooms but there is a wide mix of floor plans for two-bedrooms.

The least expensive two-bedroom starts at $4,875 a month. There are five penthouses ranging from $8,125 a month to $10,500 a month. Even with the price tag, the complex quickly got nine leases signed in the first few days after leasing started last week — a bit rare in the world of apartment leasing considering the complex is still under construction and renters won't be able to move in until June.

Sarah Potter, Cisterra development and asset manager, said lease signers — and those who have expressed interest — tend to fall into two categories: Young professionals attracted to life in a happening part of downtown, and empty nesters who want to experience downtown life but aren't ready to buy a condo.

Parking starts around $150 a month but can go up based on EV charging and other factors. It still might be cheaper for a downtown worker who regularly pays for a spot in a parking garage, or a Padres season ticket holder that ends up paying for lots frequently.

Radian has no subsidized housing, with Cisterra paying around $3 million in fees instead. Money collected can be used in the construction of affordable housing, but city planners prefer it to be included in projects. Still, it is common in projects downtown to pay fees rather than lose money on a handful of apartments in the long term.

Another plus for Radian — that will likely please downtown residents, and probably visitors — is the construction of a two-story Target that will take up much of the ground floor. Construction is ongoing on the store, which will take up 36,000 square feet, but a date for its opening is not yet set.

Simone: Is it 'Instagram-worthy'?

The biggest project to open downtown this year will be Simone, with 395 apartments and one of the tallest buildings in the area at 455 feet.

Its website calls it Little Italy's most anticipated new address — technically, it is a block outside of the neighborhood on Union Street — and seems to be aiming for affluent renters based on its promotional materials, featuring a scantly clad woman coming out of a pool with a designer watch and sunglasses and fancy cocktails.

"These Instagram-worthy amenities are inspired by the posh looks of the trendiest boutique hotels," the website reads.

Dallas-based developer Trammell Crow Residential did not respond to calls or emails about the project. The building's construction company, Swinerton, gave the Union-Tribune a tour of the outside — but Trammell Crow told them the newspaper was not permitted to enter.

CoStar, which uses secret shoppers, said the average rent for a studio (average 575 square feet) is $3,011 a month; for a one-bedroom (average 731 square feet), $4,237; and for a two-bedroom (1,157 square feet), $5,808 a month. There will be 32 subsidized units for low-income renters.

Mike Berryhill, Swinerton San Diego division manager, said people have called them asking to rent an apartment, even though they aren't in a position to sign leases, and construction isn't anticipated to be completed until June.

Construction on the project started in December 2020 on a lot that had previously been used by Aladdin Bail Bonds. At some points, there were up to 300 workers a day working at the site, Berryhill said. A large part of the construction included more than 400 parking spots spread out among three below-ground floors, and four above ground.

Simone was approved by Civic San Diego, downtown's former planning agency, in 2018. Cisterra workers expressed pride in the building, which was the tallest the company ever built downtown. Rick Collette, senior project manager, said it was bittersweet the project was ending.

"It's been a really good collaborative effort," he said.

Amenities include a sky deck with a pool on the 36th floor, co-working space, a gym, pet area and a speakeasy hidden behind a bookshelf.

While new downtown projects might be positive for the city center, planners and advocates say there is still a lot of work to be done. Marco Li Mandri, president of New City America, which works to transform communities (including Little Italy and East Village), said new high rises alone will not be enough to change downtown.

Li Mandri said public spaces — like Piazza della Famiglia in Little Italy — are needed to create a better experience for residents and transform areas into residential neighborhoods. Better than just parks, he said plazas seem to encourage residents to come and interact with each other.

"Public space and people watching is the new retail," he said.

This story originally appeared in San Diego Union-Tribune.


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