San Diego's Apartment Market Balances Even as New Supply Rages
San Diego's apartment market finds itself in balance, even as new supply rages through the area, according to a report from Northmarq.
What's driving the resilience? That's the employment gains and consistent renter demand, according to Conor Freeman, Northmarq's vice president of debt & equity.
While Diego multifamily investment activity slumped during the second quarter, median pricing moved higher, according to the report. Year-to-date, the median sale price is $415,000 per unit, up 25% from last year. Cap rates remain stable at 4.7% on average.
"Capital remains interested in high-quality multifamily opportunities, particularly in coastal and infill locations where long-term fundamentals remain compelling," he told GlobeSt.com.
"As permitting slows and the development pipeline thins, we expect the market to regain momentum with improving occupancy trends supporting rent growth and investment activity."
New San Diego multifamily development came online at an increased pace in Q2 2026, bringing year-to-date completions to nearly 3,900 units, more than double the rate of delivery posted during the same period in 2025.
That said, multifamily operating fundamentals in San Diego were generally positive during the second quarter, as asking rents increased while vacancy held steady. Overall, performance varied across submarkets, with several long-running trends beginning to shift.
For example, rent largely mirrored year-prior levels, though some major areas posted modest gains while former leaders such as Balboa Park lost momentum. After averaging nearly 10% annual rent growth over the five years ending in 2025, Balboa Park rents declined by roughly 2% in the past 12 months.
Vacancy patterns followed similar negative trajectories, with Clairemont/Linda Vista/Mission and National City/Chula Vista experiencing slight increases into the mid-4% range. Downtown San Diego remained the highest-vacancy submarket at 8.5%, yet the rate has edged down from its early-2025 peak and rents advanced 3% over the past year in the area.
Investment activity was limited, but the few second-quarter trades closed at elevated pricing for their respective asset classes. Median pricing has climbed in 2026 as Class A properties represent a larger share of sales—about 30% this year compared with less than 10% in 2025. Class B's, on the other hand, recorded a sharp 40% increase in per-unit pricing, surpassing $500,000.
Much of this surge reflects the concentration of Class B trades in coastal, higher-income areas such as La Jolla and Encinitas. Even so, transactions occurred across a wide range of neighborhoods, with no single submarket dominating overall sales activity.
Source: GlobeSt/ALM