San Diego considering more apartment rental regulations to limit fees.

 

San Diego is considering new apartment regulations regarding rental fees.

The End of an Era: Fry's Electronics Retail Use in Serra Mesa Gives Way to New Apartment Development

The iconic Fry’s Electronics building located at 9825 Stonecrest Blvd San Diego, California 92123,  in the Serra Mesa neighborhood, was once a hub for tech enthusiasts, is being demolished to make way for a new apartment complex. The property, which has stood vacant since Fry’s closed its doors in February 2021, will be transformed into a 310-unit apartment complex.  

The Highest and Best Use of many retail properties in San Diego County has shifted to multifamily housing.  The site, just south of a Walmart along the I-15, has excellent exposure and access. 

Since Fry's closed its doors, the once-bustling parking lot has been fenced off, signaling the start of its transformation. As construction moves forward with plans for the new 310-unit multifamily development, it marks another shift in Serra Mesa’s landscape, with a growing focus on housing in the area. Though it’s bittersweet for those who remember the thrill of Fry’s and Incredible Universe, it’s a reminder of how retail spaces must evolve to meet the community's changing needs.

Rental Rates Since the LA Fires

 

The Guardian is reporting on rents in L.A. since the fire.    According to the article, "Between 7 and 18 January, more than 1,300 listings on Zillow appear to have broken the state’s price gouging law, the report found. More than 1,100 landlords and real estate agents have engaged in the tactic, with 38 identified as repeat offenders. Altogether, the listings sought to illegally overcharge renters by $7.7m a month, or $92.4m a year."

Are San Diego Apartment Rents Getting Rigged By AI?

 

Are San Diego Apartment Rents Getting Rigged By AI?   Channel 10 News reports that the City of San Diego is investigating the impact that apartment websites have on rental rates. Studies in other major metropolitan areas have indicated that large multifamily operators have been using leasing platforms that share data, which has increased rents. 

 

Apartment Rental Increases in San Diego

 

Some San Diego apartment landlords are increasing rents above the legally allowed limit.

Section 8 Apartments

 

Section 8 Apartment Voucher System - Not Working in 2024.  USA Today has an article about apartment tenants needing help finding Section 8 rental units in the current market.   

Blackstone Apartments in San Diego

 

CBS News reports on Blackstone apartment rents in San Diego.   

San Diego's Multi-Family Ranking

Rent Cafe has reported the new Multi-Family market rankings based on the most recent Yardi Matrix data from July 2024.  According to the report, which tracks Apartment properties with 50 units or more, the units had an average lease renewal rate of 53.10% and an overall occupancy rate of 94.8%. The apartment units turned over were vacant for an average of 43 days and had an average of 10 applicants. You can see the full report here: San Diego Apartment Ranking

Apartment Renters

 

CNN has a report on apartment renters who are getting tapped out. 

New Laws In California Attempt to Address Housing Shortage

 

The Business Insider has an interesting article about New Laws Attempt to Increase Housing Stock In California.   A high percentage of the homeless in the U.S. are in the State of California, and the governor has been signing a number of bills to increase the housing stock by making it easier to develop apartments and condominiums on sites that would not have normally qualified for multi-family development.  The increase in housing prices by approximately 5,000 basis points since the pandemic has created a situation where most properties must be carefully screened during the commercial appraisal process to determine their highest and best use, especially in coastal areas.  Many more properties qualify as tear-downs because real estate developers are willing to pay top dollar for buildable sites.  

Some Airbnb Rentals Shifting Back to Monthly Apartment Rentals

The inevitable paradox of profit is seeing a reckoning in some market areas where investors purchased apartments, condos, and single-family homes to convert to short-term rental use.  The combination of competing inventory and operating expenses (especially the property taxes and local municipality hotel taxes, which are now being enforced in most markets) have changed up the math and have some operators shifting the properties back to monthly rentals.  

Some Airbnb owners are shifting back to monthly rentals.  

San Diego Approves New Tenant Protection Ordinance

 

New laws to take effect for local apartment owners.

According to KUSI, "The Tenant Protection Ordinance will apply protections from day one of a lease with exemptions for short-term leases, offer financial assistance to tenants from landlords when a tenant’s lease is terminated through no fault of their own and have accountability measures to punish those violating tenant protections."

Section 8 Policies Have Been Revised

New Section 8 Policies in the City of San Diego 

A lawsuit has prompted changes to Section 8 threshold levels in multiple zip codes.  This impacts both rental property owners and families that can qualify for the Section 8 housing program. 

San Diego Authorizes Rapid Approval of Affordable Housing Projects

 

The City of San Diego is starting to pull out all the stops to get more housing approved and online.  The Mayor has issued a new executive order.  It will be interesting to see how many developers step up based on the potential for fast-track project approval. 

San Diego Executive Order For Rapid Approval of Affordable Housing Projects

Rent Cafe Ranks San Diego As One of the Most Competitive Apartment Markets In the U.S.

San Diego is listed as one of the top most competitive apartment markets in the United States, according to a report released by Rent Cafe.    The study has San Diego ranked as the 13th most competitive apartment market in the United States, with a 97.1% apartment occupancy rate and a 55.3% apartment lease renewal rate, with most apartments having 22 applicants.  

Apartment Renters In Downtown San Diego Consider Cancelling Leases Due to the High Homeless Population

  

Apartment renters want to pull out of leases in downtown San Diego due to the increase in the homeless population.  Renters that have leased downtown are reporting that they are concerned enough about the increase in the homeless population that they are considering relocating.  

Short-Term Rental Market Changes

 

 As larger investment groups have gone into the short-term rental market, the Airbnb Industry Is Changing with fewer single property owner/operators.  We are also seeing broader advertising and more competition among rental units in many markets.  Websites that previously only advertised apartment units are now starting to sell short-term rentals.  The City of San Diego has finalized its short-term rental permit requirements and limiting the number of permits it will issue each year.  

City of San Diego Ordinance for No-Fault Evictions That Took Effect on May 22, 2022

 

City of San Diego Ordinance for No-Fault Evictions took effect on May 22, 2022, and is ​in place until September 30, 2022,​ or sooner based on the City ending the moratorium with the resolution of Covid.​  The link to the ordinance is here:  City of San Diego No-Fault Ordinance  

The ordinance was explicitly designed not to allow evictions to renovate until September 30, 2022.   They handled this by stating that evictions can only occur for court-ordered renovations. The law does not openly say that evictions for other renovations cannot happen. It simply omits any mention of this as something that is not allowed.  This City of San Diego ordinance extends to duplexes and single-family rentals as well as apartments.

A youtube video posted by a realtor about the new regulations is here:  Realtor's Summary of the new law.

The City of San Diego Approves a New Eviction Moratorium For Apartment Owners

 

The City of San Diego Approves A New Eviction Moratorium For Apartment Owners

New Law Encourages Apartment Developments & Multi-Family Housing

 

California SB 10 took effect on January 1, 2022.  The new state-wide bill impacts vacant land with the potential for apartment and multi-family developments throughout San Diego.  The bill authorizes local governments to zone most parcels (there are a few exclusions) for up to 10 units of residential density when the parcel is located in a transit-rich area, a jobs-rich area, or an urban infill site.  Just as apartment rent control laws took a while to be processed by the market, it is expected that this law and how local regulators implement it will take some time to sort out.  A copy of the bill can be found here. New Law Encourages Apartment Developments & Multi-Family Housing 

Once the local regulators weigh in to which sites qualify, then the brokerage, appraisal, and banking community will then sort out how this impacts highest and best use, property valuations, and underwriting rules for new commercial loans and the commercial appraisals that will back these loans.