Around 4,000 new apartments are opening in San Diego County this year — but they aren’t cheap

Not even a rent slowdown can stop San Diego’s apartment building boom.

Around 4,000 new apartments are set to open in 2025, coming near or matching totals in the past few years, which were also big for multifamily building. Unlike past eras of construction, the growth isn’t limited to one area — projects are opening from Oceanside to the border.

Rents have been essentially flat in San Diego County for more than a year, but many of the new complexes charge well above average, hitting $3,000 a month in some buildings.

The largest complex will be in Convoy District, the 531-unit Alexan Camellia, expected to open late this year. Rents are not set yet but, like most new projects this year, prospective tenants might experience sticker shock.

“(Developers) need to charge high rents because of the high cost of construction,” said Nathan Moeder, principal with real estate analysts London Moeder Advisors.

He said new apartments are spread more evenly across the county than in recent years — when several large complexes opened next to each other downtown and in Chula Vista — so competition for tenants won’t drag rents down as much.

Moeder said competition for renters will still be there, but developers are more likely to offer concessions than come out of the gate with a lower price. For example, many new complexes are offering several weeks, or even up to two months, free.

Average rent in San Diego County in early February was $2,497, said real estate tracker CoStar, up 0.8% in a year. That’s the flattest rent increase since 2011, during the Great Recession, and a momentary pandemic blip in March 2020.

The vacancy rate in San Diego County was 5.3% in early February, down from 5.45% in the second quarter of 2024. It hit a low point for the last decade of 2.63% in the third quarter of 2021.

Higher costs of borrowing, construction labor and materials were expected by many experts to slow apartment growth. Yet another year has come without that happening.

Moeder said it’s likely most projects got financing in place before November 2023, and the region is just experiencing the tail end of that.

If all projects under construction finished on time, there would be more than 5,000 new apartments opening this year. Given the scale of the construction and delays that often come up, a safer bet is probably closer to 3,500, said Joshua Ohl, CoStar director of market analytics.

Last year was rare because a conservative estimate of 4,000 new units at the start of 2024 turned into 4,600 apartments by the end.

Ohl said CoStar are seeing fewer new projects starting this year, perhaps finally reflecting the current rent slowdown. However, Ohl said, apartment complexes starting construction now are likely betting on a better environment when they open. CoStar predicts rents will rise closer to historical norms in 2026 and 2027.

San Diego County wasn’t isolated in its apartment-building frenzy. Multifamily construction nationally surged in 2024, said real estate website RentCafe, which calculated more than 500,000 apartments to be completed for the first time in history. Final numbers are still being calculated for the year.

An increase in multifamily construction has been cited as a reason for rent slowdowns across the nation. In January, Zumper said national rents for a one-bedroom were down 0.3% annually, and two-bedroom rents were flat.

In that report, San Diego ranked as the 10th most expensive rental market. New York was the most expensive, followed by San Francisco, Jersey City and Boston.

Even with a rent slowdown, some developers are going to push forward because it’s what they do, said Lori Holt Pfeiler, CEO of the San Diego County Building Industry Association.

“If they can make it pencil, they will go ahead,” she said. “Our builders are passionate about building housing. Building housing is their life. They take pride in being able to do it. They have to have that kind of attitude because you’re hitting your head against the wall every day to get the financing, get through the process.”

Mini-apartment building in North Park

At 11 units, North Park’s newest apartment building isn’t exactly solving the San Diego housing crisis. Yet it represents dozens of projects that have turned aging, underused buildings into apartments.

Developer Purpose Real Estate has remade the two-story 3140 University Ave., a 100-year-old building, into a residential and retail hotspot. The building had spent years swapping out businesses that never seemed to last that long.

The building was constructed in the 1920s and has been home to a candy store, several gyms and, most notably, the Waldorf House of Televisions in the 1940s, which is believed to be the first television store in San Diego.

Nate Cadieux, owner of the development group, said a lot of the history of the building was uncovered in the attic of the structure. Now, old San Diego Union advertisements, found in the attic, are framed in the hallways of the apartment building.

He said the roughly $8 million to buy and rehab the property was worth it to have location in North Park next to bars and restaurants. It might not have as many amenities as other new complexes, but it has plenty of foot traffic.

“Nothing attracts people more than people,” he said of the location.

Rents at The Waldorf are more than county averages: For a 346-square-foot studio, it’s $2,195 a month; For a 596-square-foot one-bedroom, it’s $2,650 a month; and for a 608-square-foot two-bedroom, $2,995 a month. Prices vary by size.

CoStar said in early February that the countywide average for a studio was $1,931 a month for a studio; $2,212 for a one-bedroom; and $2,674 for a two-bedroom.

The building also has retail space on the first floor occupied by Moniker General Outpost, a café with another location in Liberty Station, and Carne Y Hueso, a Mexican restaurant, which is still under construction.

Similar to other recent North Park apartment buildings, The Waldorf does not have parking but instead has an agreement with a parking lot across the street. Renters will need to pay $150 a month to park in the lot, or attempt to get street parking — not impossible in that part of North Park, but likely not easy on a daily basis.

Remaking the building took 16 months and required new electric, gas, water and sewer systems.

Cadieux said the first renters to sign leases have been young professionals. He said he expects interest from people who want to live in a more boutique-style complex, defined by its exposed brick walls and nods to history.

The highest pool in San Diego County

Rents are high at downtown’s newest complex, 800 Broadway, but so is the pool.

At 480 feet, 800 Broadway is one of San Diego’s tallest residential towers and its pool is on the 40th floor, the highest in San Diego County.

The complex is one of the most expensive new apartment buildings. Average rent for a studio (average 469 square feet) is $2,803 a month; For a one-bedroom (634 square feet), $3,293; and a two-bedroom (1,020 square feet), $4,670 a month. However, as an opening promotion, the building is offering eight weeks free on some leases.

The price comes with likely the most amenities of any complex this year. Residents in 800 Broadway’s 389 apartments will have access to a gym (complete with Peloton bikes and a yoga room), a speakeasy with a lounge and 10-seat conference room (which can be rented out for $125 an hour), outdoor lounge with grilling stations, co-working area, high-end appliances, washer and dryers in every unit and more.

Lucas Roof, community manager at 800 Broadway, said the majority of people signing leases have been in their late 20s to early 40s, and the most common professions have been nursing and military.

“Everyone is impressed with the view,”  he said last week while giving The San Diego Union-Tribune a tour of the 40th-floor lounge.

The complex has 33 apartments for low-income renters spread throughout the building. To qualify, renters had to earn 50% of the area median income, or about $53,050 for an individual.

Parking may become an issue if the building gets fully occupied. There are 289 parking spots for the 389 apartments. The monthly price for a spot starts at $125 but can go up based on location and if EV charging is needed. Unlike several projects throughout San Diego without parking, 800 Broadway is a short walk to two San Diego Trolley stops.

There is 5,767 square feet of retail space on the ground floor of the building. It doesn’t have tenants yet, but some of the space is designed to hold a restaurant.

Chicago-based CA Ventures, developer of 800 Broadway, declined to give a final cost estimate, but similar projects downtown have been built for $100 million and up. Work on 800 Broadway began in May 2021 but it faced pandemic shutdowns and more. Plans for the project site, which used to be a parking lot, were first heard by downtown’s planning agency in 2017.