More than 2,000 new apartments are opening this year in San Diego County, most of which are high-end and downtown.

The trend towards greater amenities with these projects follows past years, as luxury complexes cater to pets, install high-tech gyms and zero-edge pools typically found at resorts in an effort to outdo each other.

Experts say developers are looking for a specific renter — the affluent millennial — and most market projections show it is working.

The average rent for the new apartments this year is around $2,489 a month. That’s about $868 more a month than the average San Diego County rent, said real estate tracker CoStar.

Apartment construction tends to yo-yo even in high demand years because of labor shortages, weather, financing and other factors — but it is looking like 2018 will be big for new units. Local real estate tracker MarketPointe Realty Advisors said 861 new apartments came out last year compared to 765 in 2016. Those numbers are a far cry from the 3,825 projects unveiled in 2015 and 2,100 in 2014.

With new apartment complexes come major changes to neighborhoods. Most of the new complexes are in East Village and Little Italy, where former commercial areas and two-to-three story buildings have been easy to knock down and replace compared to other parts of the city.

About Eighty percent of all new apartments coming out in San Diego County this year are in the city.

The amenity rush
To compete for renters, developers have allocated much of the space in complexes toward amenities.

In Oceanside, Ryan Companies is building a new apartment building directly across from one they completed in 2016. Pierside South will be completed in October with 110 units, many with ocean views. Now under construction, the property will include a gym, dog run, office areas, lounge on the top floor, yoga studio and storage units on each floor.

“The younger workforce looks for these features,” said Garrett Faller, project manager at Pierside. “The amenities are the selling point.” Unlike its first apartment building on the property that was wood frame, Pierside South will be built with steel. Although more expensive, it makes future alterations to the building easier.

The coming condo boom?
There are about 250 new condos coming out this year, but most developers avoid constructing them because of strict liability laws.

Many of the new apartment buildings opening this year are built well enough that they could be converted to condos very easily — especially those with steel construction that are easier to modify. Conversions pretty much stopped after the housing boom and frequent litigation over construction defects made condos less profitable for developers.

Condos are subject to strict defect legislation over a 10-year period. So, after 10 years could all these high-end apartments become condos and avoid a barrage of lawsuits?

There’s no clear answer because of a lack of history on the subject, said attorney Paul Robinson of the San Diego firm of Hecht Solberg Robinson Goldberg & Bagley. He said a strict reading of the condo defect law — Senate Bill 800 — could be interpreted to mean apartment conversions after a decade do not fall under it.

Even though the legal possibilities might not make it worth it for condo conversion, Gary London said at least the high-end apartments today could make a conversion easier. “If you build it really good today,” London said, “then 10 years from now you’re not going to have to put in hard costs or construction costs to make it condo-eligible.”

Source: SDuniontribune by Phillip Molnar