Next several months are typically slow for leasing
By Joshua Ohl
CoStar Analytics
San Diego has experienced its third straight month of declining rents, having fallen 0.3% in November, and December will likely continue this trend.
Even so, the 0.9% cumulative drop in average asking rents in the past three months was an improvement compared to the past two years, which saw rents fall during the same period by 2.2% in 2022 and 1.9% in 2023.
In the past 12 months, rents have increased 0.9% across San Diego to an average of $2,494 per month. That has outpaced the California locales of Orange County and Los Angeles. Among metropolitan areas with more than 100,000 market-rate units, that makes San Diego the nation’s sixth-most expensive rental housing market.
In November, lower-rated properties were the only class segment where rents rose, albeit marginally. Rents edged up 0.1% to an average of $1,805 per month. Luxury and mid-tier properties each reported 0.4% rent losses, bringing average monthly rents to $3,337 and $2,535, respectively.
The neighborhood level offered mixed results. In downtown San Diego, where rents grew 0.3% in October, landlords returned those gains after lowering rents by an average of 0.4% in November to $3,215 per month. In the past 12 months, rents in the downtown area fell 0.7% after more than 1,500 market-rate units opened.
But last month in the University Town Center area, rents fell 1.4% to an average of $3,251 per month — the equivalent of mid-April.
Along the southern Interstate 15 corridor, rents fell 1% in neighborhoods from Carmel Mountain to Scripps Ranch to an average of $3,023 per month. That erased the gains landlords saw in October. East County, the Balboa Park neighborhoods and South County were other areas where rents fell between 0.2% and 0.4% in November.
However, there were a few notable outperformers in the area. For example, Mission Valley rents grew 0.2% in November to an average of $2,816 per month. That ended the run of monthly rent losses that started in July and saw rents fall 1.5% by the end of October.
Rents also increased 0.5% in the beach towns along the central coast market in November. That disrupted three months of rent losses from August through September when rents fell 1.4%.
Landlords are still employing concessions to translate leads into leases and to stabilize renewals. In November, more than 20% of properties reported offering concessions, from free rent to gift cards to look-and-lease specials. That is down from more than 25% over the past few months, although it tracks with the past few Novembers. Property managers have said concessions will likely be in play at elevated levels during the next several months, which are typically among the slowest for leasing.
(Posted with permission by CoStar)
