San Diego Multifamily Market Report

Developers exhibit confidence in future downtown demand. Home to one of the nation’s lowest Class A vacancy rates, San Diego appears well equipped to handle a wave of new units during 2023. The metro’s downtown, however, may experience some volatility. After compressing to the mid-2 percent band in the early part of last year, vacancy in the CBD rose during each of the subsequent four quarters, despite a minimal number of supply additions. This movement placed downtown unit availability above its pre-pandemic benchmark, with the rental stock slated to grow by nearly 5 percent this year. These supply additions — specifically several large-scale projects in Little Italy and the East Village — will place upward pressure on vacancy and increase overall concession usage in the CBD.