Thor Kamban Biberman

Despite new construction, a report stated that San Diego County's apartment vacancy rate has dropped to less than half of what the industry considers to be an optimum level. The San Diego County Apartment Association (SDCAA) reported the countywide rental vacancy rate in its dropped to just 2.3 percent in the current fall survey -- a 12-year low. The rate was 4.1 percent in the fall of last year; a vacancy rate of 5 percent is considered optimal by the industry.

While San Diego may not be the country's top market for institutional investors, big players are taking notice, according to a panel at an Urban Land Institute event Feb. 17. Bob Prendergast, JLL managing director; Philip Monroe, founding principal of Locale Advisors; and Timothy Wright, a Holliday Fenoglio Fowler senior managing director, discussed the state of capital markets.

Millennials -- people born between the early 1980s and the late 1990s -- might not be getting the kinds of apartments they need from the stock currently being constructed in downtown San Diego. Nathan Moeder, a London Group principal, said downtown has approximately 3,300 apartments in the pipeline and approximately 65 percent are studios and one-bedroom units. "This deviates significantly from the historical norm of 60 percent-plus being two bedrooms," Moeder said.