Ideas for Urban Infill Projects
The following infill development example in the San Diego MSA is representative of the opportunities that exist within today’s real estate market due to stabilization and economic recovery. Many of the core locations such as Los Angeles, New York, and the West Coast, in general, have seen significant cap rate compression and aggressive rent growth, signaling to time to build, which is why Legacy Real Estate Ventures, LLC has focused on launching a home building platform in 2014 capable of handling opportunities in the market. We look forward to the challenges, and here is a preview of some of our design ideas for urban infill projects (click this link or the renderings for a GOOGLE FLY BY of the site).
A Strong Housing Recovery
The San Diego MSA has experienced a strong housing recovery since the beginning of 2011. The countywide economy has steadily improved since it bottomed in 2009 according to data on the leading economic indicators. The Unemployment rate has stabilized at 8.5% and remains below California’s 10.4% unemployment. Between 2007 and 2010 San Diego lost 103,300 jobs. Since that time, approximately 51,000 jobs have been added and nearly every industry created jobs in 2012. San Diego County reached an estimated $185.8 billion in Gross Domestic Product with a 2% targeted growth rate, the most ambitious growth rate projected since 2006. Since 2012 San Diego County has experienced a robust real estate recovery. All real estate asset classes participated in the slow, albeit steady, stabilization within the market. Real estate activities account for nearly one in every five dollars generated by the regional economy.
Single-Family Home Prices
It is important to understand how each type of real estate performed over the past year and translate this data to the Project. Single-family home prices appear to have been slowly rising since they bottomed in 2009, and that continued in 2013. The median single-family detached sales price in San Diego increased by 20.4% and the sales price of single-family attached increased by 27% since October 2012 year over year. Housing starts remain flat year over year throughout the County due to the lack of available entitled land. In the apartment marketplace, San Diego displayed a considerably low vacancy rate of 4.5% with a 3.5% rental increase across the county. The outlook for San Diego’s multi-family market in 2013 should remain optimistic with high occupancy and modest rent growth as the demand for rental residences still outweighs the supply. Rental growth is poised for an increase for higher-end apartment communities located in core areas. The rental increases will continue for the next several years as the county will only be adding 2,000 units a year until 2016 which is far below normal output.